TMI Tax Updates - e-Newsletter
March 22, 2025

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. India’s ‘Proof of Origin’ Amendment - What It Means for Importers & Global Trade

   By: DrJoshua Ebenezer

2. Navigating the Complexities of Outward Secondment Arrangements in India: Tax and GST Implications

   By: Shivam Agrawal

3. GST Amnesty Scheme: What’s in store for taxpayers?

   By: Sakshi Jhajharia

4. ROC Compliance Checklist for Pvt. Ltd Annual Return Filing

   By: Ishita Ramani

5. GIVE IT WHOLEHEARTEDLY

   By: K Balasubramanian

6. PENALTY CANNOT BE IMPOSED BASED ON CONJECTURES, POSSIBILITIES OR SURMISES

   By: DR.MARIAPPAN GOVINDARAJAN

7. GST Tale of a Non-Resident Businessman in India🌏

   By: Pradeep Reddy

8. You could end up in a GST mess—even if your vendor missed GST payments!

   By: Pradeep Reddy

9. Export of Rubber Tubes for Bicycles and Motorcycles, Scooters, etc. from India

   By: YAGAY andSUN

10. Export of Bearings from India.

   By: YAGAY andSUN

11. Export of Auto Components from India

   By: YAGAY andSUN

12. Export of HVACs (Systems/Equipment) for Automobiles from India.

   By: YAGAY andSUN

13. BIS (Conformity Assessment) Regulations, 2018

   By: YAGAY andSUN

14. ISO 22000 Certification (Food Safety Management System): Overview

   By: YAGAY andSUN

15. Non-GMO Certification: Overview

   By: YAGAY andSUN

16. Food Safety and Standards (Licensing and Registration of Food Businesses) Regulations, 2011

   By: YAGAY andSUN

News

1. R'than Budget FY26 to provide Rs 324 cr to farmers for fencing: Vishnoi

2. RBI board assess global and domestic landscape, approves Budget for FY'26

3. Tripura govt presents Rs 32,423.44 crore tax free budget, proposes 13 new schemes

4. Budget, salary proposal for MLAs passed in Karnataka Assembly amidst din

5. Chhattisgarh assembly passes budget for 2025-26

6. Punjab Budget 2025-26 gets cabinet nod, to be presented in Assembly on Mar 26

7. Punjab: Budget session starting Friday likely to be stormy affair

8. Mahila Samriddhi Yojana to be implemented after budget: Delhi BJP chief

9. Prime Minister’s Internship Scheme - Empowering Youth, Enabling Careers

10. Government Enhances GeM Platform to Boost Inclusivity for Women-Led and Small Enterprises

11. Leveraging Non-conventional Data Sources for Official Statistics

12. India’s Trade and Economic Outlook

13. PFRDA notifies Regulations for Operationalisation of the Unified Pension Scheme (UPS)

14. India important partner for economic cooperation, bilateral trade growing: Slovak minister

Notifications

Customs

1. 18/2025 - dated 20-3-2025 - Cus

Seeks to amend Notification No. 9/2012-Customs, dated the 9th March, 2012

DGFT

2. 66/2024-25 - dated 20-3-2025 - FTP

Extension of RoDTEP for Advance Authorizations (AAs) holders, Special Economic Zones (SEZs), and Export-Oriented Units (EOUS) upto 05.02.2025

GST - States

3. S.R.O. No. 305/2025 - dated 20-3-2025 - Kerala SGST

Central Tax Notification for waiver of the late fee

4. S.R.O. No. 304/2025 - dated 20-3-2025 - Kerala SGST

Kerala Goods and Services Tax (Amendment) Rules, 2025.

5. 8/2025-State Tax (Rate) - dated 5-2-2025 - Mizoram SGST

Amendment in Notification No. 17/2017-State Tax (Rate) dated 11th July, 2017

6. 6/2025-State Tax (Rate) - dated 5-2-2025 - Mizoram SGST

Amendment in Notification No. 12/2017-State Tax (Rate), dated the 11th July, 2017

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2025/36 - dated 21-3-2025

Facilitating ease of doing business relating to the framework on “Alignment of interest of the Designated Employees of the Asset Management Company (AMC) with the interest of the unitholders”

2. SEBI/HO/CFD/CFD-PoD-2/P/CIR/2025/37 - dated 21-3-2025

Industry Standards on “Minimum information to be provided for review of the audit committee and shareholders for approval of a related party transaction”

Highlights / Catch Notes

GST

• Accused in Rs. 31.18 Crore Input Tax Credit Fraud Granted Bail After Six Months in Custody

  Case-Laws - HC : The HC granted regular bail to the applicant accused of availing ineligible Input Tax Credit of Rs. 31.18 crores based on fake invoices from non-operational firms. The Court noted that the prosecution's case relied on documentary evidence already filed in tax returns, and the applicant's business account had been released after initial attachment. Considering that the alleged offenses carry maximum punishment of five years, are triable by Magistrate, and the applicant had already spent six months in judicial custody, the Court concluded that further detention would serve no useful purpose. The prosecution witnesses were official witnesses with minimal risk of tampering. Bail was granted subject to conditions.
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• Advertisement Tax Demands After GST Implementation Declared Illegal Under Section 173 of U.P. GST Act

  Case-Laws - HC : HC held that Kanpur Nagar Nigam lacks authority to levy advertisement tax after the implementation of the U.P. GST Act, 2017 and Constitution (101st Amendment) Act, 2016. The court clarified that its previous order unambiguously quashed tax demands falling within Section 173 of U.P. GST Act read with the 101st Constitutional Amendment. Advertisement tax collected beyond April 1, 2017, must be refunded to petitioners. The municipal corporation's demands for advertisement tax after July 1, 2017, were declared illegal. The application seeking further clarification was dismissed as the original order was sufficiently clear and required no additional interpretation.
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• GST Fraud Accused Granted Bail After 54 Days in Custody Under CGST Act for Input Tax Credit Evasion

  Case-Laws - HC : The HC granted bail to the proprietor of M/s P.S. Enterprise who was accused of fraudulently availing Input Tax Credit and evading GST payments amounting to crores of rupees. After 54 days in judicial custody (against the mandatory period of 60 days), the Court determined that the primary purpose of the CGST Act is not penal but to recover amounts due to the Government Exchequer. Following precedent in Sanjay Kumar Bhuwalka v. Union of India, which established that monetary payment is the Government's right while arrest is only for statutory violations, the Court granted bail subject to specified conditions, noting that GST officials had sufficient opportunity to interrogate the petitioner.
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• Time Extension for GST Show Cause Notices Challenged: Court Questions Validity of Notifications Under Section 168A

  Case-Laws - HC : The HC granted ad-interim relief against notifications extending time limits for issuing Show Cause Notices under the CGST Act. The court found a strong prima facie case on two grounds: first, similar challenges to these notifications had already received interim relief in other petitions before the same court; second, the SCN in question should have been issued before May 31, 2024, as Section 73(2) requires issuance at least three months prior to the time limit specified in Section 73(10). The court questioned whether the notifications issued under Section 168A had proper GST Council recommendation. The matter was scheduled for further hearing on April 22, 2025.
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• Bail Granted in GST Case: Arrest Deemed Invalid for Non-Compliance with Section 35(3) of BNSS, 2023

  Case-Laws - HC : The HC found the petitioner's arrest vitiated due to non-compliance with Section 35(3) of BNSS, 2023, which requires issuance of a notice of appearance prior to arrest. The court determined that despite the petitioner's cooperation with summons under Section 70 of CGST Act, proper arrest procedures were not followed for an offense punishable with less than five years imprisonment. Applying the "test of proportionality" between individual liberty and public interest, and following precedents from Arnesh Kumar and Satender Kumar Antil cases that favor discretion toward accused in cases with imprisonment under seven years, the HC granted bail to the petitioner who had been incarcerated since January 30, 2025, for alleged wrongful ITC availment of 5.10 crores.
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• Refund of Excess GST Collected by Promoter Denied as Petitioners Failed to Pursue Legal Action Against Promoter First

  Case-Laws - HC : The HC dismissed the petition regarding refund of excess GST collected by a promoter and deposited with the respondents. The Court determined that petitioners had prematurely approached judicial remedy without first pursuing legal actions against the promoter to obtain necessary documentation for processing their refund claim. The Court noted that such documentation was required to properly sanction any refund under applicable GST Act provisions and Rules. The petition was dismissed without costs, with the Court declining to intervene at this procedural stage where administrative remedies had not been exhausted.
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• Retrospective GST Registration Cancellation Requires Proper Justification and Notice Under Section 29 of CGST Act

  Case-Laws - HC : The HC ruled that retrospective cancellation of GST registration requires proper justification and adherence to natural justice principles. Following Riddhi Siddhi Enterprises precedent, the Court held that Section 29 of CGST Act allows retrospective cancellation only when deemed fit based on objective criteria, not mechanically. The authority's failure to provide reasons in the Show Cause Notice supporting retrospective cancellation and failure to give prior notice of such intent invalidated the action. The Court modified the impugned order, directing that cancellation would take effect from the SCN date (25 October 2021) rather than the retrospective date (23 October 2020) originally imposed.
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• Input Tax Credit Claims Valid Under Section 16(5) Despite Section 16(4) Limitations in CGST Act

  Case-Laws - HC : The HC quashed the attachment of the petitioner's banking account, following precedent established in Sri Ganapathi Pandi Industries (2024). The Court determined that the petitioner's claim for input tax credit, while barred under Section 16(4) of the CGST Act, 2017, was still within the limitation period prescribed by Section 16(5) of the same Act. The Court disposed of the petition on the same grounds as the precedent case, ruling that tax authorities cannot deny ITC claims that fall within the extended limitation period under Section 16(5), despite being outside the standard limitation period under Section 16(4). Petition allowed.
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• Input Tax Credit Claims Protected by Retrospective Amendment to Section 16(5) of CGST Act Despite Time Limitations

  Case-Laws - HC : The HC quashed orders reversing ITC claims based on time limitations, following its precedent in W.P.Nos.25081 of 2023. The court determined that the retrospective amendment to Section 16 of the CGST Act, specifically the insertion of sub-section (5) effective from 01.07.2017, entitles petitioners to avail ITC for GSTR-3B returns filed for FYs 2017-18 through 2020-21 on or before 30.11.2021. The court directed the respondent-Department to de-freeze bank accounts and cease recovery actions, thereby allowing the petition and establishing that the retrospective amendment overrides the original limitation period in Section 16(4).
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Income Tax

• Income Tax Reference Under Section 92CA Quashed Due to Violation of Natural Justice Principles

  Case-Laws - HC : The HC quashed the reference made by respondent no. 1 to respondent no. 2 under s. 92CA, along with the notice and approval granted by the Principal Commissioner of Income Tax dated 24.12.2019. The court found that the petitioner was not provided a proper opportunity to be heard before the case transfer to the TPO, violating para 3.4 of Instruction No. 3 of 2016. The respondent hastily made the proposal on 24.12.2019 after issuing notice under s. 142(1) on 23.12.2019, giving minimal response time. The court determined the purported opportunity of hearing was merely an empty formality, resulting in breach of natural justice principles.
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• Principal Commissioner's Transfer of Income Tax Case Under Section 127 Upheld Despite Procedural Objections

  Case-Laws - HC : The HC upheld the transfer of the petitioner's case from Vadodara to Pune under s.127 of the Income Tax Act. The Court determined that the corrigendum order providing further opportunity of hearing was valid and in continuation of the original transfer order, aimed at fulfilling statutory requirements for reasonable hearing opportunity. The petitioner's contention that the corrigendum notice was without jurisdiction was rejected, particularly as the petitioner failed to respond to the notice. The Court found the transfer justified based on suspicious cash transactions with M/s. G.K. Associates assessed in Pune, noting that transfer powers under s.127 involve public interest considerations and assessees cannot select their Assessing Officer.
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• Capital Gains from Rights Entitlement Sales Exempt Under Article 13(6) of India-Ireland DTAA

  Case-Laws - AT : The ITAT ruled that capital gains from the sale of rights entitlement are exempt from taxation in India under Article 13(6) of the India-Ireland DTAA. The Tribunal determined that rights entitlements constitute separate assets distinct from shares of the Indian Government, falling outside the scope of Articles 13(4) and 13(5). Consequently, such gains are taxable only in the resident state (Ireland), not in the source country (India). Additionally, the Tribunal held that capital losses under the Act read with Article 13(5) cannot be set off against short-term capital gains from rights entitlement sales since these gains are not taxable in India. The ITAT also directed the AO to rectify computational errors in the assessment order.
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• Assessing Officer Cannot Make Additions Outside Limited Scrutiny Scope Without PCIT Permission for Section 2(22)(e) Deemed Dividend

  Case-Laws - AT : The ITAT ruled that an Assessing Officer cannot make additions outside the scope of limited scrutiny without obtaining mandatory permission from the PCIT/Pr.CIT to convert it to complete scrutiny. In this case, the AO improperly made a deemed dividend addition under section 2(22)(e) without such permission, violating binding CBDT circulars. The Tribunal held that since the addition pertained to an issue not included in the limited scrutiny parameters, it could not be sustained. The additional ground raised by the appellant was allowed, and the ITAT directed the deletion of the section 2(22)(e) addition, deciding in favor of the appellant.
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• Additions for Bogus Electricity Pole Installation Charges and Cash in Locker Deleted by CIT(A), Decision Upheld

  Case-Laws - AT : The ITAT upheld the CIT(A)'s deletion of additions made by the AO regarding alleged bogus charges for installation of electricity poles and purchases. The Tribunal found that the CIT(A) had meticulously examined evidence from each vendor, and the AO failed to demonstrate any perversity in the CIT(A)'s assessment. The ITAT also confirmed deletion of additions related to cash found in a locker, acknowledging it represented company funds reflected in imprest accounts. Additionally, the Tribunal sustained the CIT(A)'s allowance of bad debts written off by the assessee, recognizing that MCD had refused payments due to investigations into Commonwealth Games 2010 contracts, making the debts reasonably uncollectible despite legal remedies not being exhausted.
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• Improper Aggregation of International Transactions for Transfer Pricing Analysis Rejected Under Rule 10D

  Case-Laws - AT : ITAT rejected the TPO's approach of aggregating all international transactions for transfer pricing analysis. The Tribunal found that the TPO improperly combined payment and receipt of intra-group services (IGS) using the same OP/OC or OP/OR benchmarking metrics, despite the assessee maintaining separate "Craft division" accounts. The TPO failed to provide adequate opportunity for the assessee to substantiate its cost allocation basis between divisions. The matter was remanded to the TPO to conduct separate benchmarking for services rendered and received using appropriate methods (TNMM or CUP) under Rule 10D. The appeal was decided in favor of the assessee for statistical purposes.
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• Income Tax Department Ordered to Process Long-Delayed Refunds by April 2025 or Face 6% Interest Penalties Recoverable from Officers

  Case-Laws - HC : HC directed the Income Tax Department to issue orders regarding refunds owed to Petitioners by April 15, 2025, following the department's failure to implement a 2006 ITAT order. Any refunds must be paid by April 30, 2025, with Petitioners agreeing to waive interest claims if this deadline is met. Should payment be delayed beyond this date, 6% annual interest will apply, to be recovered from the responsible officers rather than the State Exchequer. The Department must file a compliance report by May 5, 2025, with the court noting that Petitioners should not need to file fresh petitions for enforcement.
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• Income Tax Reassessment Notices Quashed: AO Failed to Apply Independent Mind When Evaluating Investigation Wing's Report Under Section 147

  Case-Laws - HC : The HC quashed reassessment notices under Section 147 of the Income Tax Act, finding that the Assessing Officer failed to properly consider the Investigation Wing's report and mechanically issued notices without independent application of mind. The AO erroneously treated the total of debit and credit entries from the petitioner's books as escapement of income, without establishing any rational nexus between the transactions and alleged income escapement. Following precedents in Paresh Babubhai Bahalani and Bharatkumar Nihalchand Shah, the Court held that non-specific reasons without establishing nexus between transactions and income escapement invalidate reassessment jurisdiction. The proceedings were set aside due to lack of independent satisfaction in the recorded reasons.
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• Penalty Under Section 271(1)(c) Requires No Proof of Willful Concealment, Clarifies Court

  Case-Laws - HC : The HC set aside ITAT's interpretation that stricter culpability standards are required for imposing penalty under s.271(1)(c). The court relied on Dharamendra Textile Processors, which established strict liability for concealment or inaccurate particulars in returns, clarifying that willful concealment is not essential for civil liability under s.271(1)(c), unlike prosecution under s.276-C. The HC distinguished this from Dilip N. Shroff, which was deemed incorrectly decided. Despite correcting the legal principle, the HC declined to interfere with ITAT's deletion of penalty in the specific case, as the amount was below Rs.5 lakhs and the assessee was an individual, thus partially affirming the ITAT order.
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• Delay in Filing Corrected Tax Return Should Be Condoned When Error Is Merely Presentational Under Section 119(2)(b)

  Case-Laws - HC : The HC quashed the order rejecting the petitioner's application under s119(2)(b) of the Income Tax Act for condonation of delay in filing a corrected return. The petitioner had erroneously clubbed disallowances under s37 in column-23 instead of properly recording them in columns 15 and 18 of Form ITR-6. Since this was merely a presentation error with no impact on taxable income, and was made to facilitate CPC processing for potential refund, the Court held that the tax authority should have condoned the delay. The HC directed respondent to process the revised return filed on 06/09/2019 in accordance with law, emphasizing that the correction was a formality that did not alter the substantive tax position.
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• Dismissal of Review Petition: No Grounds Found as Original Order Based on Counsel's Concession and Supreme Court Precedent (15)

  Case-Laws - HC : HC dismissed the review petition against its order that had remitted the case for fresh assessment. The court found no grounds for review as the original order was based on a concession by the review petitioner's counsel and the remittance was in accordance with Supreme Court precedent. The petitioner's argument regarding the inapplicability of the proviso to Section 2(15) to their case could not be entertained under review jurisdiction. The court relied on precedents established in Sanjay Kumar Agarwal v. State Tax Officer (1) & Anr. and Rimpa Saha to determine that the case did not fall within the limited scope of review powers.
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• Machinery replacement costs deemed revenue expenditure; fly ash silos qualify for 100% depreciation as pollution control equipment

  Case-Laws - HC : The HC ruled that expenditure on machinery replacement was revenue in nature as production capacity remained constant across factories. While benefits under Section 35(i)(iv) were denied following precedent, the court granted 100% depreciation for fly ash silos as pollution control equipment since they effectively contained and evacuated pollutants by channeling fly ash into production processes. The assessee's claim for interest deduction under Section 43B failed due to lack of evidence proving actual payment. Regarding Section 80HHC deductions, the court ruled in the assessee's favor, holding that excise duty, customs duty, and windmill power receipts form part of total turnover. However, the claim for full depreciation on dumpers was rejected as the assessee failed to prove possession or use prior to October 1, 1995.
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• Deposits Interest Linked to Plant Setup Not Taxable as "Other Sources"; Share Premium Under s. 56(2)(viib) Properly Valued

  Case-Laws - AT : ITAT upheld the CIT(A)'s deletion of two additions made by the AO. First, interest earned from deposits was correctly held to be inextricably linked with setting up the plant, following Bokaro Steels Limited (1998), and thus not taxable as "Income from other sources." Second, the Tribunal confirmed deletion of share premium disallowance under s. 56(2)(viib), as the shares were issued to an existing shareholder whose identity and creditworthiness were established. The valuation of Rs. 12 per share was properly determined using the DCF method prescribed by RBI, and the AO had not disputed this valuation methodology. Appeal decided against Revenue.
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• Penalty Order Under Section 271D Invalid as Time-Barred, Exceeding Six-Month Limitation Period Under Section 275(1)(c)

  Case-Laws - AT : The ITAT held that the penalty order under section 271D was time-barred. The AO issued reference to the JCIT on 31.07.2019, and following Mahesh Wood Products, the penalty order should have been passed within six months (by 31.01.2020). Since the JCIT passed the order on 28.02.2020, it exceeded the prescribed limitation period under section 275(1)(c). The Tribunal determined this rendered the penalty order invalid. The second contention regarding non-submission of demand notice alongside the penalty order was deemed academic since the assessee had already succeeded on the first ground. The appeal was decided in favor of the assessee.
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• Retirement Leave Encashment Exemption Under Section 10(10AA) Allowed Within Revised Rs. 25 Lakh Limit

  Case-Laws - AT : The ITAT allowed the appellant's claim for exemption under section 10(10AA) for earned leave encashment received upon retirement. Relying on the Jaipur Bench decision in Govind Chhatwani, the Tribunal noted that CBDT had revised the exemption limit from Rs. 3,00,000 to Rs. 25,00,000 through Notification No. 31/2023 dated 24-05-2023. Since the appellant's leave encashment amount fell below this revised threshold, the Tribunal directed the Assessing Officer to allow the claimed deduction within the prescribed limit. The appeal was accordingly allowed in the appellant's favor.
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• Settlement Deeds Between Brothers Constitute Family Arrangement, Not Taxable Transfer Under Section 2(47) of Income Tax Act

  Case-Laws - AT : The ITAT ruled that settlement deeds executed between the appellant and his brother constituted a family arrangement rather than a taxable transfer under s. 2(47) r.w.s 45/48 of the Income Tax Act. The Tribunal held that the CIT(A) erred in treating the simultaneous settlement deeds as an exchange transaction subject to capital gains tax. The ITAT determined that these settlement deeds, executed to prevent future disputes, were independent transactions properly characterized as settlements by stamp duty authorities. The Tribunal concluded that such family settlements fall within the exception provided under s. 47(iii), thereby negating capital gains tax liability. Relying on precedents from the SC and Madras HC regarding family arrangements, the ITAT allowed the appellant's appeal and deleted the capital gains addition.
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• Tribunal Rejects Transfer Pricing Adjustment for AMP Expenses as Tax Authorities Failed to Prove Foreign Brand Benefit

  Case-Laws - AT : The ITAT ruled against the transfer pricing adjustment for AMP expenses, finding tax authorities failed to demonstrate that such expenses benefited the foreign AE's brand. The Tribunal held that AMP expenditure quantum alone cannot establish benefit to AEs, as brands are customer-centric rather than product-centric. Regarding royalty payments, the ITAT found the TPO's rejection of comparable agreements unjustified. Issues concerning management service fees, interest on outstanding receivables, and payments to 'Dart' were remanded to the AO/TPO for fresh determination in accordance with precedents from earlier assessment years and relevant case law, including Kusum Healthcare. All grounds were sustained either substantively or for statistical purposes.
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• Adjustments Under Section 143(1) Can Be Challenged When Merged Into Assessment Order Under Section 143(3) r/w/s 144B

  Case-Laws - AT : The ITAT held that when adjustments made under section 143(1) are incorporated into a subsequent assessment order under section 143(3) r/w/s 144B, the doctrine of merger applies, allowing the assessee to challenge such adjustments in an appeal against the assessment order. While dismissing Revenue's ground that CIT(A) erred in entertaining the appeal challenging section 143(1) adjustments, the Tribunal found that CIT(A) failed to provide reasoning for accepting the assessee's contentions without calling for a remand report. Regarding TDS credit, the ITAT directed the AO to allow additional TDS credit of 27,40,247 after verifying that corresponding income was offered to tax, requiring the assessee to file a reconciliation statement as evidence.
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• Bareboat Dredger Hire Charges Not "Royalty" Under India-Netherlands DTAA Article 12; No Permanent Establishment in India

  Case-Laws - AT : ITAT held that hire charges for bareboat dredgers do not constitute "Royalty" under Article 12 of India-Netherlands DTAA, as the term specifically excludes payments for use of industrial, commercial, or scientific equipment. The Tribunal relied on precedents from Van Oord ACZ Equipment BV, Nederlandsche Overzee Baggermaatsehappiji BV, and International Seaport Dreding Ltd. cases. Furthermore, ITAT determined the appellant had no business connection or permanent establishment in India, rendering attribution of profits inapplicable. The Tribunal also rejected evidence from survey statements recorded under s.133A, noting they cannot be treated as conclusive without cross-examination. The appellant's appeal was allowed.
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• Foreign Assets Disclosed in Revised Return After Search Action Sufficient to Avoid Penalty Under Section 43 of Black Money Act

  Case-Laws - AT : The ITAT upheld the CIT(A)'s decision to set aside the penalty imposed under Section 43 of the Black Money Act for failure to disclose foreign assets. Despite the appellant's argument that quantum assessment proceedings differ from penalty proceedings, the Tribunal agreed with the CIT(A) that a revised return replaces the original ITR. The ITAT confirmed that when the assessee disclosed foreign assets through a revised return (albeit after search action), this disclosure was sufficient to justify setting aside the penalty for AY 2017-18. The Tribunal noted that while the CIT(A) should have first addressed whether disclosure in Schedule FA was required, the decision to cancel the penalty was ultimately correct. Appeal decided against revenue.
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Customs

• Mumbai Customs Launches Outreach Program to Boost Women's Participation in International Trade Under National Trade Facilitation Action Plan 3.0

  Circulars : Mumbai Customs Zone-1 is organizing an outreach program to enhance women's participation in the EXIM trade ecosystem as part of the National Trade Facilitation Action Plan 3.0. The interactive session will be held on March 19, 2025, at New Custom House, focusing on awareness of opportunities and skill upgradation initiatives for women in international trade. A dedicated facilitation helpdesk for queries about skill development and AEO Program support will operate from March 18-31, 2025. The initiative aims to foster gender inclusivity in India's trade ecosystem, with a designated nodal officer overseeing implementation. All trade stakeholders are encouraged to participate in advancing this gender inclusivity objective.
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• Customs Dispute: Court Reduces Security Requirements for Imported Roasted Areca Nuts Classification Under Heading 2008 vs 080280

  Case-Laws - HC : The HC addressed the classification dispute over imported roasted areca nuts, determining whether they fall under Chapter Heading No. 2008 19 20 (petitioner's claim) or Heading No. 080280 (respondents' position). The court modified the security requirements for provisional release of goods, directing petitioners to deposit reduced security amounts and ordering respondents to issue provisional release orders within three days of such deposit. The court further mandated expedited final assessment following receipt of petitioners' submissions and evidence. The petition was disposed of with these directions, effectively reducing the financial burden on the importers while ensuring customs compliance through a streamlined assessment process.
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• Customs Duty Demand Overturned for 17 Entries Where No Samples Were Drawn Under Section 114AA

  Case-Laws - AT : CESTAT ruled in favor of the appellant regarding 17 previous Bills of Entry, finding that the test report from a later import (Bill of Entry No. 4199210) could not retroactively apply to earlier shipments where no samples were drawn. The Tribunal set aside the demand for customs duty, interest, penalties, and confiscation related to these 17 entries. However, the Tribunal upheld the duty demand for Bill of Entry No. 4199210, as testing confirmed the imported Polystyrene was in granular form (CTH 39031990) rather than powder form (CTH 39031910), making it ineligible for BCD exemption. The penalty imposed on the appellant's Director under Section 114AA was reduced from Rs.10,00,000 to Rs.1,00,000, proportionate to the duty involved in the single contested entry.
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• Customs Valuation Rules Must Follow Section 14 Procedures: CESTAT Overturns Order for Bypassing Two-Step Verification

  Case-Laws - AT : CESTAT set aside the impugned order concerning undervaluation of imported goods, finding it vitiated by arbitrariness. The tribunal determined that proper authorities failed to comply with the two-step verification and examination exercise mandated by the Supreme Court in Century Metal Recycling. Revenue authorities did not follow the procedure under Rule 12(2) of CVR, 2007, and improperly relied solely on statement declarations to establish transaction value. Additionally, appellant's request for cross-examination was denied, raising procedural fairness concerns. CESTAT held that Rule 9 cannot be interpreted in violation of Section 14 of the Customs Act, as rules remain subservient to the parent Act. Appeal disposed of accordingly.
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DGFT

• DGFT Reviews Input-Output Norms for Automobile Tyres Under A-1722, A-1717, A-1667, A-1666, A-1673, A-1665, A-1664, A-1663

  Circulars : The Directorate General of Foreign Trade has initiated a review process for existing Standard Input Output Norms (SIONs) for automobile tyres (A-1722, A-1717, A-1667, A-1666, A1673, A-1665, A1664, A-1663). Stakeholders including Export Promotion Councils, exporters, and trade bodies are requested to examine current SIONs and submit modification suggestions with supporting documentation including production data, consumption data, and wastage norms certified by a Chartered Engineer. All submissions must be sent to [email protected] within 45 days from March 20, 2025, for examination by the Directorate.
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• Deadline for Filing Annual RoDTEP Return for FY 2023-24 Extended from March to June 2025

  Circulars : Pursuant to powers under paragraphs 1.03 and 2.04 of the Foreign Trade Policy, 2023, DGFT has extended the deadline for filing Annual RoDTEP Return (ARR) for FY 2023-24. The original deadline of 31.03.2025 has been extended to 30.06.2025, with the grace period similarly extended from 30.06.2025 to 30.09.2025. This three-month extension applies specifically to RoDTEP benefits availed for exports during FY 2023-24, providing exporters additional time for compliance with the annual return filing requirements under Para 4.94 of the Handbook of Procedure.
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State GST

• GST Clarifications: Pepper at 5%, Agriculturists Exempt for Dried Pepper and Raisins, Popcorn Rates Vary

  Circulars : The West Bengal Directorate of Commercial Taxes has issued clarifications on GST rates and classifications based on the 55th GST Council meeting. Key determinations include: pepper of genus Piper attracts 5% GST, with exemption for agriculturists supplying dried pepper; agriculturists supplying raisins are exempt from GST registration; ready-to-eat popcorn with salt/spices attracts 5% GST (unpackaged) or 12% GST (packaged), while caramel popcorn attracts 18% GST; AAC blocks with over 50% fly ash content attract 12% GST; and the amended compensation cess on utility vehicles with specific dimensions applies from July 26, 2023 onward.
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• Late Fee for Annual GST Returns Applies Until Both GSTR-9 and GSTR-9C Are Filed Under Section 47(2)

  Circulars : The WB Directorate of Commercial Taxes has clarified that late fee under s.47(2) of WBGST Act applies to delayed filing of complete annual returns, which includes both GSTR-9 and GSTR-9C (where required for taxpayers exceeding specified turnover thresholds). Late fee is calculated from the due date until the complete return is furnished. For taxpayers required to file GSTR-9C, the annual return is considered incomplete until both forms are submitted. Through Notification No. 312-F.T., late fee for financial years up to FY 2022-23 has been waived beyond what was payable up to the GSTR-9 filing date, provided GSTR-9C is submitted by March 31, 2025. No refunds will be processed for late fees already paid.
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• West Bengal Clarifies GST Exemptions for Penal Charges, Payment Aggregators, and R&D Services Funded by Government Grants

  Circulars : The West Bengal Directorate of Commercial Taxes has issued clarifications on GST applicability for several services. Key determinations include: no GST on penal charges levied by Regulated Entities for loan contract non-compliance; GST exemption for Payment Aggregators handling transactions up to 2,000; regularization of GST payments for R&D services by Government Entities against grants (July 2017-October 2024); regularization for Training Partners approved by National Skill Development Corporation (October 2024-January 2025); GST applicability on facility management services to MCD; confirmation that Delhi Development Authority is not a local authority under GST law; and regularization of GST payments for various other specified services during transition periods.
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• Insurance Co-Premium Apportionment and Reinsurance Commission Now Included in Schedule III of WBGST Act from November 2024

  Circulars : The West Bengal Directorate of Commercial Taxes has regularized GST payment for two insurance-related transactions on an "as is where is" basis for the period from 01.07.2017 to 31.10.2024. Effective 01.11.2024, these transactions have been included in Schedule III of the WBGST Act as neither supply of goods nor services: (1) co-insurance premium apportionment by lead insurers to co-insurers, provided the lead insurer pays GST on the entire premium; and (2) ceding/reinsurance commission deducted from reinsurance premiums, provided the reinsurer pays GST on the gross reinsurance premium inclusive of commission. This implementation follows recommendations from the 53rd GST Council meeting.
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IBC

• Staying "Further Steps" in CIRP Doesn't Restore Management to Suspended Board Under Section 17 of IBC

  Case-Laws - AT : In this NCLAT decision, the Tribunal clarified that although it had stayed "further steps" to be taken by the IRP in its earlier order dated 07.12.2023, this did not terminate the CIRP or restore management to the suspended Board of Directors. The Tribunal held that once CIRP was initiated and the IRP appointed on 04.12.2023, management of the Corporate Debtor vested with the IRP by operation of Section 17 of IBC. Despite the stay preventing the IRP from taking procedural steps like inviting claims or constituting the Committee of Creditors, the legal fiction created by IBC means the IRP retains control over the Corporate Debtor's assets. The suspended Board cannot resume control, as the stay order did not revert to status quo ante or quash the CIRP initiation.
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• Resolution Plan Must Pay Dissenting Financial Creditors Their Liquidation Value Upfront Before Payments to Assenting Creditors

  Case-Laws - AT : The NCLAT upheld the Adjudicating Authority's interpretation of Clause 21 of the resolution plan, confirming that dissenting financial creditors must receive their liquidation value upfront before any payments to assenting financial creditors. The Tribunal distinguished this case from Puro Natural Sugars JV, noting that here the plan explicitly provided for priority payment to dissenting creditors. The dissenting creditors had rejected the plan because they preferred receiving a smaller amount (15% liquidation value) immediately rather than 100% over ten years. The NCLAT found no error in the Adjudicating Authority's directive requiring payment to dissenting financial creditors before any recoveries by assenting creditors. Appeal dismissed.
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SEBI

• New Online Filing System for Takeover Regulation 10(7) Reports Starts March 2025

  Circulars : SEBI has implemented an online filing system through the SEBI Intermediary Portal for reports submitted under Regulation 10(7) of the Takeover Regulations. Initially, this system will apply to exemptions under Regulations 10(1)(a)(i) and 10(1)(a)(ii), with dual filing (email and portal) required between March 20, 2025, and May 14, 2025. From May 15, 2025, only portal submissions will be accepted for these exemptions. Fee payment must be processed through the SI Portal, with the previous payment mechanism being discontinued. Reports regarding other Regulation 10 exemptions will continue to be submitted via email. The circular was issued under Section 11(1) of the SEBI Act to protect investor interests and regulate securities markets.
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VAT

• Absolute Tax Exemption Under CST Act Remains Valid Despite Later C-Form Requirement Under Section 8(5)

  Case-Laws - HC : The HC ruled that the notification dated 31-10-2006, requiring C-Form production for tax exemption under Section 8(5) of the CST Act, would not apply to the petitioner company. The petitioner had been granted absolute exemption from tax liability effective 22-9-1996 pursuant to a 1993 notification after investing over Rs. 1,000 crores in an Integrated Steel Plant. Following Supreme Court precedent in Prism Cement Limited, the HC determined that the 2002 amendment to Section 8(5) making C-Form production mandatory applies prospectively only and cannot retrospectively affect previously granted absolute exemptions. The petitioner's exemption remains valid as per the original 1993 notification until 30-6-2017 when the GST regime commenced.
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Service Tax

• Doctrine of Mutuality Protects Club Activities from Service Tax; Intellectual Property Classification Fails Without Legal Protection

  Case-Laws - AT : CESTAT ruled that service tax demands on the appellant were unsustainable across multiple categories. For business exhibition services, the tribunal found that exhibitions exclusively for members fell under the doctrine of mutuality. The intellectual property service classification failed due to absence of legally protected intellectual property under Finance Act, 1994 s.65(55b). Club or association service tax on membership and subscription fees was invalidated based on the doctrine of mutuality, following Supreme Court precedent in State of West Bengal v. Calcutta Club Ltd. Consequently, penalties under s.78 were dismissed as the underlying tax demands were unsustainable. Revenue's appeal was dismissed.
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Central Excise

• Excise Duty Not Applicable on Ziking (Slag): Involuntary By-products Not Taxable as Goods

  Case-Laws - AT : The CESTAT ruled that Ziking (slag), a by-product emerging during Silico Manganese manufacture, is not subject to excise duty. Following precedents in Monnet Ispat and Haryana Steel cases, the Tribunal determined that by-products involuntarily produced during manufacturing are not excisable goods. The demand of Rs.23,52,292/- on Ziking sales was set aside. Additionally, the Tribunal rejected the alleged shortage of Silico Manganese stock, finding that the verification was conducted merely on "eye estimation basis," which was insufficient to establish a shortage. Consequently, the demand of Rs.6,42,584/- was also set aside. With no sustainable demands, the Tribunal ruled that no penalties were imposable on the appellants. Appeal allowed.
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• Excise Duty: Inter-connected Undertakings Not "Related Persons" Under Section 4(3) Without Specific Determination

  Case-Laws - AT : The CESTAT ruled that the appellant's excisable goods clearance to an inter-connected undertaking should be valued under Rule 10, not Rules 8 & 9 of the Central Excise Valuation Rules, 2000. The Tribunal held that designation as inter-connected undertakings under Income Tax Act does not automatically establish a "related person" relationship under Central Excise law. Without specific determination of relationship under Section 4(3) of the Central Excise Act, 1944, the revenue authorities improperly treated the transaction as between related parties. Following precedents in Gajra Gears and Ramsons Casting cases, the Tribunal concluded that absent evidence of relatedness, inter-connected undertakings cannot be deemed "related persons" for valuation purposes. Appeal allowed.
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Case Laws:

• GST

• 2025 (3) TMI 1032
  Seeking grant of regular bail - availing ineligible Input Tax Credit (ITC) on the basis of fake invoices received from non-operational firms - HELD THAT:- This Court finds that the entire case of the prosecution is founded upon the documentary material and as far as the alleged ineligible availment of Input Tax Credit of Rs. 31.18 crores is concerned, the same is part of the tax returns filed by the applicant/firm M/s Shreeji Metals. Further, during the course of hearing, it is not disputed by the learned Counsel for the Union of India that the account of M/s Shreeji Metals was attached vide order dated 07.10.2024, but subsequently, it was liberated vide order dated 08.11.2024, Annexure-2 appended with the supplementary affidavit dated 22.01.2025. Admittedly, the alleged offences are triable by Magistrate and provide for a maximum punishment of five years imprisonment, and trial is likely to consume considerable time to conclude, therefore, this Court has no hesitation in holding that the further detention of the applicant behind the bars would not serve any useful purpose, who is confined in judicial custody. Further, the prosecution witnesses are official witnesses and presently there does not appear to be any possibility of their being won over, therefore, considering the nature of the trial as well as period of six months undergone by the applicant as an undertrial, this Court deems it appropriate to extend the concession of regular bail to the applicant, subject to fulfilment of conditions imposed. Conclusion - This Court has no hesitation in holding that the further detention of the applicant behind the bars would not serve any useful purpose, who is confined in judicial custody. Bail application allowed.

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• 2025 (3) TMI 1031
  Authority of Kanpur Nagar Nigam to levy and collect advertisement tax or fees after the legislative changes brought by the U.P. Goods and Services Tax (GST) Act, 2017 and the Constitution (101st Amendment) Act, 2016 - HELD THAT:- Insofar as in the penultimate paragraph of the order (of which clarification is sought), it has been clearly provided that the demand impugned in the writ petition to the extent such demands fall in the teeth of Section 173 of U.P. G.S.T. Act read with the 101st Constitutional Amendment is quashed and further to the extent it has been provided by that co-ordinate bench that any amount of Advertisement Tax deposited by the petitioners for the period beyond 01.04.2017 may be refunded to the petitioners and no further or other direction was issued, that order is crystal clear as to its reasoning and as to the effect it causes. It admits of no doubt as to what has been provided and what has not been decided. Conclusion - The Kanpur Nagar Nigam s demands for advertisement tax post-July 1, 2017, are illegal. To the extent, the order is itself speaking and admits of no doubt, the present application fails and is liable to be dismissed. It is dismissed.

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• 2025 (3) TMI 1030
  Extension of time limit for issuing Show Cause Notice (SCN) - Challenge to N/N. 9/2023-Central Tax dated 31st March, 2023 N/N. 56/2023 Central Tax dated 28th December, 2023 issued by Respondent No. 6 (Union of India) and N/N. 9/2023 State Tax dated 24th May, 2023 N/N. 56/2023 dated 16th January, 2024 issued by Respondent No. 1 (State of Maharashtra) exercising powers u/s 168A of the Central Goods and Services Tax Act, 2017 (CGST Act) - HELD THAT:- The issue involved in the Writ Petition is identical to the issue involved in EVIE REAL ESTATE PRIVATE LTD. VERSUS STATE OF MAHARASHTRA [ 2025 (3) TMI 173 - BOMBAY HIGH COURT] where it was held that a strong prima facie case is made out for granting interim relief to the Petitioner. As the issue is identical, similar order is required to be passed in the present Petition also - A strong prima facie case is made out for granting interim relief to the Petitioner. Petition disposed off.

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• 2025 (3) TMI 1029
  Seeking to quash SCN, issued without jurisdiction - SCN did not contain proper reasons - violation of the doctrine of double jeopardy, barred by res judicata - principles of natural justice - HELD THAT:- Upon a perusal of the show cause notice, it is clear that ingredients of Section 74 of the Uttar Pradesh Goods and Services Tax Act, 2017 (hereinafter referred to as the Act ) have not been adhered to, as there is no allegation of fraud or any willful-mis-statement and/or suppression of material facts in the said show cause notice. Subsequent to issuance of said show cause notice, this writ petition has been filed. However, in the meantime, order under Section 74 of the Act has also been passed by the authorities. The order is also bereft of any reasons for issuing the notice Section 74 of the Act and does not comply the ingredients thereof. Conclusion - The SCN did not adhere to the requirements of Section 74 of the UPGST Act, as it lacked allegations of fraud or willful misstatement. Consequently, the impugned SCN and the subsequent order were quashed and set aside. Petition disposed off.

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• 2025 (3) TMI 1028
  Seeking grant of bail - fraudulent availment of Input Tax Credit - contravention of the conditions of eligibility stipulated in Section 16(2)(b) of the CGST Act, 2017 - HELD THAT:- On perusal of the case diary, it reveals that the petitioner is the proprietor of the alleged company M/s P.S. Enterprise against whom the allegations was made evading payment of total GST amounting to crores of rupees. Learned counsel for the petitioner prayed to release the accused on bail on the ground of length of detention i.e. 54 days in judicial custody wherein the mandatory period is 60 days. It is not in dispute that the alleged offences are punishable with imprisonment up to a maximum period of 5 (five) years and compoundable in nature. It transpires that the object and the purpose of CGST Act is not penal in nature but it is for the purpose of legislation being to recover any amount that may be due to the Government Exchequer. In the case of Sanjay Kumar Bhuwalka Vs. Union of India [ 2018 (7) TMI 589 - CALCUTTA HIGH COURT ], wherein the benefit of bail was granted to the accused person on deposit of certain portion of disputed liabilities/dues. While deciding a bail application in the case of similar nature, the Court observed Revenue is the monetary payment due to the Government and non-payment, whatever be the means applied for such non-payment confers right on the Government, both central and the State, to realize the revenue whereas penal provision of arrest and detention is only when there is violation of the provision under the statute which is not the intention of the legislature to achieve the fiscal object regardless of the existence of a provision for the arrest of the offender in the Act. Conclusion - Situated thus, as it appears that the petitioner has been languishing in judicial custody for last 54 days, the GST officials has got sufficient opportunity to interrogate the petitioner. Under such backdrop, this Court is inclined to grant bail to the petitioner - the petitioner is granted bail subject to fulfilment of conditions imposed. Bail application allowed.

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• 2025 (3) TMI 1027
  Extension of time limit for issuing Show Cause Notice (SCN) - Challenge to N/N. 9/2023-Central Tax dated 31st March, 2023 N/N. 56/2023 Central Tax dated 28th December, 2023 issued by Respondent No. 6 (Union of India) and N/N. 9/2023 State Tax dated 24th May, 2023 N/N. 56/2023 dated 16th January, 2024 issued by Respondent No. 1 (State of Maharashtra) exercising powers u/s 168A of the Central Goods and Services Tax Act, 2017 (CGST Act) - HELD THAT:- The issue involved in the Writ Petition is identical to the issue involved in Evie Real Estate Private Limited v/s. State of Maharashtra Others [ 2025 (3) TMI 173 - BOMBAY HIGH COURT ] where it was held that a strong prima facie case is made out for granting interim relief to the Petitioner . As the issue is identical, similar order is required to be passed in the present Petition also - A strong prima facie case is made out for granting interim relief to the Petitioner. Petition disposed off.

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• 2025 (3) TMI 1026
  Extension of time limit for issuing Show Cause Notice (SCN) - Challenge to N/N. 9/2023-Central Tax dated 31st March, 2023 N/N. 56/2023 Central Tax dated 28th December, 2023 issued by Respondent No. 6 (Union of India) and N/N. 9/2023 State Tax dated 24th May, 2023 N/N. 56/2023 dated 16th January, 2024 issued by Respondent No. 1 (State of Maharashtra) exercising powers u/s 168A of the Central Goods and Services Tax Act, 2017 (CGST Act) - point raised in this Petition is that these Notifications issued under Section 168A have to be on the recommendation of the GST Council - HELD THAT:- A strong prima facie case is made out for granting of ad-interim relief. This is for two reasons. Firstly the challenge to the aforesaid Notifications is already in issue in several other Writ Petitions before this Court, and in which ad-interim relief is already granted. On the same parity, ad-interim relief would have to be granted in the present Writ Petition also. Secondly, prima facie, it is found that the Show Cause Notice itself ought to have been issued before 31st May, 2024. This is because, the Show Cause Notice has to be issued atleast three months prior to the time limit specified under Section 73 (10) of the Act. In the present case, the Show Cause Notice has not been issued prior to three months as stipulated in Section 73 (2) of the Act. The above matter placed on board on 22nd April,, 2025 under the caption for ad-interim reliefs .

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• 2025 (3) TMI 1025
  Cancellation of registration of the Petitioner under the CGST Act, 2017/MGST Act, 2017 - failure to file returns for more than six months - Petitioner is willing to pay all dues together with interest - HELD THAT:- Considering the peculiar facts of this case, and the fair concession made by the learned Addl. GP, we direct the Respondents to compute, within a period of two weeks, the dues if any, payable by the Petitioner. The amount so determined must be communicated to the Petitioner within a period of one week thereafter, and upon the Petitioner paying the said amount, the Petitioner s registration be restored. It is needless to clarify that the registration should be restored to facilitate the payment of the dues calculated by the Respondents, and within 48 hours of restoration of the registration, the Petitioner must pay the demanded dues. If this is not done, then the registration can be cancelled without the necessity of any notice to the Petitioner. In addition to what is stated herein above, the Petitioner shall pay Rs. 40, 000/- as costs to The High Court Employees Medical Welfare Fund at Mumbai within a period of one week from today. Petition disposed off.

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• 2025 (3) TMI 1024
  Recovery of any tax for any period prior to the date when the Resolution Plan was sanctioned - Petitioner has undergone a successful Corporate Insolvency Resolution Process (CIRP) and the Resolution Plan is approved by the NCLT - HELD THAT:- The Affidavits in Reply, if any, shall be filed by the said Respondents on or before 7th April, 2025 and a copy of the same shall be served on the Advocates for the Petitioner. If the Petitioner wants to file an Affidavit-in-Rejoinder, they may do so on or before 15th April, 2025 and serve a copy of the same on the Advocate for the concerned Respondents. As far as interim relief is concerned, it is found that a strong prima facie case is made out for staying the order passed by Respondent Nos. 4 and 5 as well as the adjudication of the impugned Show Cause Notices. This is said because, atleast prima facie, the Hon ble Supreme Court in the case of Ghanashyam Mishra [ 2021 (4) TMI 613 - SUPREME COURT ] has framed a principle that when the new management takes over a Company under a Resolution Plan, it starts with the clean slate and would not be liable for the past dues of the Company and which were incurred prior to the sanction of the Resolution Plan. Conclusion - i) The principle that a company, post-CIRP and with an NCLT-approved Resolution Plan, is not liable for past dues is reaffirmed. This supports the notion of a clean slate for new management. ii) An ad-interim relief granted, staying the impugned orders and notices until further orders, indicating a strong preliminary case in favor of the Petitioner. The matter is placed on 21st April, 2025 under the caption for ad-interim reliefs .

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• 2025 (3) TMI 1023
  Seeking grant of regular bail - availment of benefit of Input Tax Credit fraudulently, amounting to Rs. 96.95 crores - HELD THAT:- In present case, the investigation is over and charge-sheet has been filed. As per the case of prosecution, the applicant is alleged to have transacted with 24 fictitious firms and the amount of transactions with those firms comes to Rs. 537 crores and on the basis of the said transactions, the applicant had wrongful availed the benefit of Input Tax Credit worth Rs. 96.95 crores though no actual goods had been exchanged between the parties. The punishment prescribed for the offence alleged in the FIR against the present applicant is to the extent of imprisonment for the period of 5 years. Having regard to the punishment prescribed for the offence so also, the fact that the trial of the offence is not likely to commence and conclude in near future, the present application deserves consideration. Conclusion - In the facts and circumstances of the case and considering the nature of the allegations made against the applicant in the FIR, without discussing the evidence in detail, prima facie, this Court is of the opinion that this is a fit case to exercise the discretion and enlarge the applicant on regular bail, subject to fulfilment of conditions imposed. Bail application allowed.

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• 2025 (3) TMI 1022
  Challenge to petitioner s arrest and subsequent judicial custody - non-compliance with the statutory requirement for the issuance of a notice under Section 35 (3) of BNSS, 2023. HELD THAT:- It is well established in modern criminal jurisprudence and constitutional law that any challenge to the legality of an arrest involves a contest between the entrenched right to life and liberty and the larger public interest and state obligation to punish the guilty. Thus, any interpretative exercise by this Court whether under its writ jurisdiction or inherent powers must employ a test of proportionality. In the case of Satender Kumar Antil v. CBI [ 2022 (8) TMI 152 - SUPREME COURT ], the Apex Court observed in respect of grant of bail to persons accused of offences punishable with less than seven years of imprisonment that one would expect a better exercise of discretion on the part of the court in favour of the accused . The Apex Court, in Ashok Munilal Jain and Anr. v. Assistant Director, Directorate of Enforcement [ 2017 (3) TMI 1642 - SUPREME COURT ] held that the procedure prescribed under the Criminal Procedure Code (CrPC), 1973 is equally applicable to criminal proceedings arising under the CGST Act, 2017. The inherent powers of a High Court are not negated by any overlap with the judicial review powers conferred under Articles 226 and 227. Writs are extraordinary constitutional remedies and operate independently of the statutory right under Section 528 to address grievances not specifically provided for in the Sanhita - The High Court may, at its discretion, entertain a petition under Article 227 of the Constitution or under Section 528 of BNSS to address a substantial question of law that goes to the root of the matter or the genesis of the prosecution. A perusal of Section 69 (3) (a) of CGST Act, 2017 reveals that the said Act envisages that the arrestee charged with a cognizable and non-bailable offence as under Section 132 (4) of the said Act shall be forwarded to the custody of the Magistrate, in default of bail. The statute does not provide for custody of the arrestee to either police or the proper officer. Therefore, the authority of the Magistrate to, either admit the said arrestee on bail or remand him to judicial custody, is to be necessarily exercised in accordance with the provisions of the BNSS, 2023 (i.e. CrPC, 1973) - the instant petition is maintainable under Section 528 of BNSS, 2017, particularly where the grounds of challenge to the arrest include non-compliance with the statutory provision of Section 35 (3) of BNSS, 2017. The Apex Court in Arnesh Kumar v. State of Bihar, [ 2014 (7) TMI 1143 - SUPREME COURT ] held that an arrest without a warrant by a police officer for a cognizable offence punishable with imprisonment of up to seven years must satisfy not only the requirement of having reason to believe that the arrestee has committed the alleged offence but also that the arrest is necessary for one or more of the purposes enumerated in sub-clauses (a) to (e) of clause (1) of Section 41 CrPC (with Section 35(1) of BNSS corresponding to Section 41 CrPC). As to the issue of notice of appearance under Section 35 (3) of BNSS (i.e., Section 41-A of CrPC), the Court observed that such notice must be served on the accused within two weeks from the date of institution of the case, with an extension by the Superintendent of Police possible for reasons recorded in writing. In the case at hand, the petitioner however, is an arrestee, who has been in custody since 30.01.2025 who had tendered evidence and cooperated with the conduct of inquiry, and thus, had compiled with the summons issued on 02.01.2025 - under Section 70 of the CGST Act, 2017. The subject of challenge herein is not the issuance of summons, but the arrest effected in pursuance of the said summons, when the same was so made without issuance of the notice of appearance under Section 35 (3) of BNSS, 2023 (or section 41-A(1) of CrPC, 1973). The case at hand involves a complaint of wrongful availment of ITC by the petitioner to the tune of INR 5.10 crores only, and the petitioner has been in remand since the date of his arrest on 30.01.2025 - The CGST, Act 2017 provides for assessment under Section 59, provisional assessment under section 60, scrutiny of returns under Section 61, assessment of persons who do not file returns under Section 62, assessment of unregistered persons under Section 63, summary assessment in special cases under Section 64, and audit under Sections 65 and 66. It is undisputed that while a prosecution can be launched prior to conduct of summary assessment or special audit determining liability, no offence can be said to be made out in respect of purported discrepancies in the furnished returns, until completion of the said audits. In light of the fact that the petitioner-arrestee was arrested against the offence punishable with no more than five years of imprisonment plus fine, but without the issuance of notice of appearance directing him to appear before the officer authorised under Section 69(1) of the CGST Act, and the fact that the petitioner has been incarcerated since 30.1.2025, coupled with the settled bail jurisprudence to exercise discretion in favour of accused of such nature, it is deemed fit that the petitioner be enlarged on bail. Conclusion - The petitioner s arrest is vitiated due to non-compliance with Section 35 (3) of BNSS. Petition is granted bail subject to fulfilment of conditions imposed - application allowed.

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• 2025 (3) TMI 1021
  Refund of excess GST collected by the promoter and deposited with the respondents - compliance with Circular No. 188/20/2022-GST or not - HELD THAT:- It appears that the petitioners have approached this Court prematurely without taking recourse to the actions against the promoter in accordance with law so as to get the requisite documents in order to process the refund claim (if any), to be sanctioned by the respondents as per the provisions of the GST Act and the Rules and therefore, we refrain to entertain this petition at this stage. The petition is accordingly dismissed with no order as to costs.

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• 2025 (3) TMI 1020
  Maintainability of petition - availability of alternative remedy - service of SCN or not - HELD THAT:- Undisputedly, the petitioner did not prefer any appeal instead he made a representation to some authority which has been dismissed as not acceptable/ maintainable. He has then approached the GST Council, which has also rejected the same. The second writ petition is not maintainable, accordingly, it is dismissed.

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• 2025 (3) TMI 1019
  Principles of natural justice - Cancellation of GST registration with retrospective effect from 23 October 2020 - whether the SCN and the subsequent order provided adequate reasons for such retrospective cancellation and whether the petitioner was given sufficient notice and opportunity to respond to the proposed action? - HELD THAT:- Section 29 of the Central Goods and Services Tax Act, 2017 Act confers upon the respondents to cancel registration from a retrospective date, in Riddhi Siddhi Enterprises vs. Commissioner of Goods and Services Tax (CGST), South Delhi Anr. [ 2024 (10) TMI 278 - DELHI HIGH COURT] held that In terms of Section 29(2) of the Act, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. Merely, because a taxpayer has not filed the returns for some period does not mean that the taxpayer s registration is required to be cancelled with retrospective date also covering the period when the returns were filed and the taxpayer was compliant. Thus, it becomes apparent that absence of reasons in the original SCN in support of a proposed retrospective cancellation as well as a failure to place the petitioner on prior notice of such an intent clearly invalidates the impugned action. The writ petition is entitled to succeed on this short ground alone. Conclusion - Retrospective cancellation of GST registration requires a reasoned order and prior notice to the affected party. The mere existence of the power to cancel registration retrospectively does not justify its use without clear and objective reasons. The writ petition is allowed by modifying the impugned order and providing that the cancellation of the petitioner s GST registration shall come into effect from the date of the SCN i.e. 25 October 2021.

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• 2025 (3) TMI 1018
  Attachment of petitioner s current Banking Account - HELD THAT:- The legal issue involved in this Writ Petition has already been dealt with by this Court in SRI GANAPATHI PANDI INDUSTRIES, REP. BY ITS PROPRIETOR VERSUS THE ASSISTANT COMMISSIONER (STATE TAX) (FAC) TONDIARPET ASSESSMENT CIRCLE, CHENNAI [ 2024 (10) TMI 1631 - MADRAS HIGH COURT] , this Court is inclined to dispose of the present Writ Petition on the same lines. It was held in the above case that The orders impugned in all Writ Petitions are quashed insofar as it relates to the claim made by the petitioners for ITC which is barred by limitation in terms of Section 16 (4) of the CGST Act, 2017 but, within the period prescribed in terms of Section 16 (5) of the said Act. Petition allowed.

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• 2025 (3) TMI 1017
  Claim of ITC was reversed/negatived on the ground of time limitation - retrospective amendments to Section 16 of GST Act - HELD THAT:- When this Writ Petition is taken up for hearing, the respective learned counsel for the petitioner and learned Additional Government Pleader for the respondent, would submit that the issue involved in the present Writ Petition, has been squarely covered by the common order of this Court, dated 17.10.2024 passed in W.P.Nos.25081 of 2023, etc., batch [ 2024 (10) TMI 1631 - MADRAS HIGH COURT] wherein, this Court has categorically held this Court considering the fact that the issue involved in all these Writ Petitions is only with regard to the availment of ITC, which is barred by limitation in terms of Section 16 (4) of the CGST Act, and in the light of the subsequent developments took place, whereby, Section 16 of the CGST Act was amended and sub-section (5) was inserted to Section 16, which came into force with retrospective effect from 01.07.2017, the petitioners are entitled to avail ITC in respect of GSTR-3B filed in respect of FYs 2017-18, 2018-19, 2019-20 and 2020-21 as the case may be, on or before 30.11.2021, is inclined to quash the impugned orders. Conclusion - i) The retrospective amendments to Section 16 allow for an extended deadline for claiming ITC, overriding the original limitation period. ii) The petitioners are entitled to avail ITC in respect of GSTR-3B filed in respect of FYs 2017-18, 2018-19, 2019-20 and 2020-21 as the case may be, on or before 30.11.2021. The impugned orders reversing ITC claims were quashed, and the respondent-Department was directed to de-freeze bank accounts and refrain from recovery actions - petition allowed.

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• Income Tax

• 2025 (3) TMI 1016
  Reopening of assessment u/s 147 - proceedings initiated after a period of four years - HELD THAT:- We are concerned with the satisfaction of jurisdictional conditions to reopen the case u/s 147 of the Act. Secondly, the decision was dealing with the assessment year 1997-1998, but the reference was made to the 2002 medical regulations without discussing how they would apply. Therefore, even on this count, this decision cannot be made applicable to the facts of the present case. We have not been shown any decision regulation or rules which required Petitioner-Assessee to disclose during the assessment proceedings that the sales promotion expenses were incurred on the doctors. Therefore, even on this count, in the absence of any obligation, there cannot be any failure to disclose fully and truly all material facts necessary for the assessment. Therefore, the decision of Kap Scan and Diagnostic Centre (P.) Ltd.[ 2012 (6) TMI 620 - PUNJAB AND HARYANA HIGH COURT] would not assist the Revenue. Decided in favour of assessee.

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• 2025 (3) TMI 1015
  Reopening of assessment u/s 147 - proceedings initiated after a period of 4 years - HELD THAT:- It is admitted that the proceedings are based on the records filed during the course of the original assessment proceedings. The reasons recorded also admits that the issue was examined during the course of the assessment proceedings and 1/3rd of the promotional expenses were disallowed and the balance expenses were allowed. If this is an admitted position as per the reasons recorded, then we fail to understand how the precondition of failure to disclose fully and truly all material facts necessary for the assessment can at all be satisfied. If at all, there is a failure, it was on the part of the assessing officer to have not disallowed the entire expenditure and not the failure on the part of the petitioner-assessee. Therefore, the pre-condition required by first proviso to Section 147 of the Act based on the admission made in the reasons for reopening are not satisfied and therefore on this short ground itself, the impugned notice dated 29 March 2016 is required to be quashed and set aside. Expenses incurred on promotional articles and their allowability - The present proceedings if permitted would amount to the proceedings based on change of opinion and review of the assessment order, which power the Act does not confer upon the assessing officer u/s 147. Furthermore, third proviso to Section 147 of the Act is clear that if the issue is pending before the Appellate Authority, then reassessment proceedings cannot be initiated. The petitioner is justified in relying upon this Court s decision in Abbot India Ltd. [ 2023 (2) TMI 468 - BOMBAY HIGH COURT] in which, on a similar fact situation, reassessment proceedings were quashed. In the instant case, the issue was already concluded by the CIT(A) before the initiation of the impugned proceedings and therefore even on this count, the impugned proceedings are without jurisdiction.

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• 2025 (3) TMI 1014
  Refunds due to the inaction of the Income Tax Department in complying with the ITAT s order - Petitioners grievance is that the time limit for giving effect to the Tribunal s order dated 31st July 2006 has long expired, still, by not issuing the order giving effect, refunds are being denied to the Petitioner. HELD THAT:- Petitioners now submits that due to not passing the order giving effect within the prescribed period of limitation, the Petitioners would be entitled to the above refund returns. On instructions, he states that if the refunds are given by 30th April 2025, the Petitioners will not claim any interest on the refunds. Accordingly, based on the statements in the affidavit filed by the Principal Commissioner of Income Tax, we direct the Respondents to pass appropriate orders on the issue of refunds by 15 April 2025. If any refunds are found due, they must be made to the Petitioners on or before 30 April 2025. If there is a delay, the refund amounts will carry interest at 6% p.a. and must be paid to the petitioners. After such payment, the interest component must be recovered from the Officers responsible for the delay. There is no point in burdening the State Exchequer and, consequently, the taxpayer for inaction, whether deliberate or otherwise, on the part of the department officials. We dispose of the petitions in the above terms by directing the Respondents to file a compliance report by 5th May 2025 with an advance copy to the learned counsel for the Petitioners. This direction is issued given the fair statement made by Petitioners that the Petitioners would not claim interest provided the amounts are refunded by 30th April 2025. In the facts of this case, it will not be proper to require the Petitioners to once again approach this Court by filing a fresh petition.

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• 2025 (3) TMI 1013
  Reopening of assessment u/s 147 - notice was issued within a period of four years from the end of the assessment year - unexplained cash deposits - HELD THAT:- Given the quality of the explanations belatedly offered, we cannot fault the assessing authorities for having reason to believe that the income has indeed escaped assessment. The circumstance that demonetization had been ordered and there was a rush to make cash deposits also cannot be ignored. In this case, the exercise of jurisdiction cannot be faulted on a cumulative consideration of all such factors. The petitioner will have the full opportunity to explain the situation during the reassessment proceedings. Petitioner offered some explanations regarding the cash deposits by Mr. Ajay Pratap Singh, Mr. Rahul Mahajan and Mr. Kumar Jayendra. Apart from the quality of the explanations, at least prima facie, they appear to be in a nature of after-thoughts. We are afraid that we cannot go into such factual aspects when deciding whether the jurisdictional parameters for re-opening the assessment were fulfilled. Based on the facts of the present case and the material on record, we are satisfied that jurisdiction has been correctly assumed. Further, whether the explanations now offered deserve to be accepted is a matter that the reassessing authority can always look into following the law. The circumstances in Aroni Commercials Limited [ 2014 (2) TMI 659 - BOMBAY HIGH COURT ] or for that matter, the other decisions relied upon by the Petitioner, were entirely different. Those were mainly cases of change of opinion. The discrepancies and explanations which are now sought to be furnished were not the subject matter of such decisions. We decline to admit this petition. However, we clarify that all contentions of all parties are kept open.

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• 2025 (3) TMI 1012
  Denial of exemption u/s 11 - rejecting the application for condonation of delay in filing Form No. 10 - HELD THAT:- It is not in dispute that the petitioner has explained in detail the cause for late filing of Form 10B. In similar circumstances, this Court in case of Parshwanath Bhakti Vihar Jain Trust [ 2024 (9) TMI 292 - GUJARAT HIGH COURT ] relying upon the decision in case of Sarvodaya Chaitable Trust [ 2021 (1) TMI 214 - GUJARAT HIGH COURT ] held that furnishing of audit report along with refund filed is to be treated as procedural requirement though it is mandatory in nature but substantial compliance is required to be made. It was further observed that the approach of the authority in such type of case should be equitable and judicious. It is also not in dispute that the petitioner trust for past many years has substantially satisfied the conditions for claiming the exemption which should not be denied for non filing of Form 10B in time. The petitioner has explained the reason for delay in filing Form 10B due to illness of the Accountant who was on leave for a long time due to medical reasons. Petition is allowed. The impugned orders are quashed and set aside. The matter is remanded back to the respondent to pass appropriate order to condone the delay in filing the Form 10B for AY 2017-2018 by the petitioner.

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• 2025 (3) TMI 1011
  Reopening of assessment - assess income of an alleged Association of Persons (AOP) formed between two companies - HELD THAT:- The impugned reopening notice in this case was admittedly issued to the Petitioners on the premise that together, they constitute an AOP. This premise would no longer hold good, given the ITAT s finding that no AOP existed. Since the base of the impugned reopening notice no longer survives, the impugned reopening notice will have to be set aside and is hereby set aside. Decided in favour of assessee.

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• 2025 (3) TMI 1010
  Reopening of assessment u/s 147 - no valid serving of notice to assessee - HELD THAT:- Revenue has not been able to demonstrate that the impugned notice u/s 148A (b); impugned order under section 148A (d) and impugned notice u/s 148 were ever served upon the assessee at its registered office at Singapore. The fact that the assessee has no Permanent Account Number nor any credentials in the IT Portal has neither been contradicted nor controverted by the revenue. Undisputedly, the assessee is a foreign company which is a resident of Singapore and appears to be covered under the provisions of DTAA. Since the facts and incidental issues raised by the assessee has neither been placed before the concerned AO nor considered in the absence thereof, we deem it apposite not to enter into the examination of substantial question of income received for Maintenance, Repair, and Overhaul (MRO) services rendered outside India inasmuch as the notice u/s 148A (b) requiring the assessee to provide relevant information and satisfactory explanation appears to have not been received by the assessee. Thus, we remit the matter to the stage of consideration of notice u/s 148A (b) of the Act.

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• 2025 (3) TMI 1009
  Reopening of assessment u/s 147 - Reasons to believe - nexus between the transaction and the alleged escapement of income - as argued no failure on the part of the petitioner to disclose fully and truly all material facts during the course of the regular assessment - HELD THAT:- AO while recording the reasons has failed to take into consideration the report of the Investigation Wing in true perspective. It also appears that the AO while recording the reasons for reopening has not even considered that the amount mentioned in the reasons regarding the AY 2013-14 is nothing but total of debit and credit side of the account of M/s. Affluence Commodities Pvt. Ltd. from the books of accounts of the petitioner. Similarly for AY 2014-15 also the reasons recorded reflects the total of the debit and credit side of the account of the said Company from the books of accounts of the petitioner meaning thereby that the AO without application of mind and contrary to any information in his possession has issued the impugned notices in a mechanical manner. This Court in case of Paresh Babubhai Bahalani [ 2023 (10) TMI 1203 - GUJARAT HIGH COURT] has referred to and relied upon the decision in the case of Bharatkumar Nihalchand Shah [ 2023 (3) TMI 1415 - GUJARAT HIGH COURT] wherein, it is held that non-specific and general reasons without establishing the rational nexus between transaction and the escapement of income are not valid for assumption of jurisdiction to reopen the assessment. r proceeded to record that the petitioner has failed to offer the income as deemed income amounting to Rs. 14, 03, 19, 900/- which is nothing but total of debit and credit side of the account from the books of account maintained by the petitioner of the said company. It is therefore, evident that the reasons recorded by the respondent are on the borrowed satisfaction without forming an independent opinion and therefore, the assumption of the jurisdiction to reopen the reassessment under Section 147 of the Act is bad in law. Reassessment proceddings set aside in absence of any independent satisfaction reflected in the reasons recorded on the basis of the information received by the AO. Decided in favour of assessee.

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• 2025 (3) TMI 1008
  Reopening of assessment u/s 147 - Reason to believe - disallowing certain percentage of expenses on samples given to doctors on the ground that same constitutes sale promotion expenses incurred on the doctor - HELD THAT:- We fail to understand if these items were not disallowed during the course of the assessment proceedings, how there can be an allegation that the petitioner has failed to disclose full and true all material facts necessary for the assessment. If at all there has been failure, it is on the part of the assessing officer of not disallowing the same. Certainly, for such a failure of the assessing officer, reopening cannot be initiated after expiry of four years from the end of the relevant assessment year. In the order rejecting the objection, the officer has not rebutted the specific plea of the petitioner that there was no failure to disclose fully and truly all material facts necessary for the assessment. The order merely reproduces the reasons as recorded, certain provisions of the reassessment and the decisions. Absence of any rebuttal of the specific objection raised by the petitioner, it shall be deemed that the respondent has accepted that there was no failure to disclose fully and truly all material facts necessary for the assessment. Thus, the impugned notice is required to be quashed on the non fulfillment of the condition prescribed in first proviso to section 147 of the Act itself. Decided in favour of assessee.

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• 2025 (3) TMI 1007
  Delay of 371 days in filing the appeal before the ITAT - Assessee has assigned the reason that the appellant came to knowledge about the impugned order on 02.05.2024 and immediately, thereafter he filed the appeal before the ITAT on 23.05.2024 HELD THAT:- The Supreme Court vide its Order in the matter of Vidya Shankar Jaiswal [ 2025 (1) TMI 1526 - SC ORDER] while setting aside the order of this Court rejecting the appeal on the ground of delay, has held that the High Court ought to have adopted justice oriented and liberal approach by condoning the delay of 166 days. As per reason shown by the appellant/assessee coupled with the fact though the application of the appellant was supported by the affidavit, but the revenue did not file any counter-affidavit controverting the reason assigned by the assessee and, as such, the delay of 371 days occurred in filing the appeal remained uncontroverted, therefore, the delay of 371 days occurred in filing the appeal being bona fide and unintentional deserves to be and is hereby condoned subject to payment of cost of 5, 000/- by the appellant to the High Court Legal Services Committee and the appellant is also directed to file proof thereof within 15 days from today. The substantial question of law is answered accordingly.

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• 2025 (3) TMI 1006
  Tribunal not recalling the ex-parte order passed when there was a reasonable cause for non-appearance on the date of hearing of the appeal - HELD THAT:- We find that the tribunal had committed a factual mistake in holding that the assessee did not appear before the CIT(A) when the fact remains that the assessee had appeared before the appellate authority and contested the proceeding on merits. We have gone through the order passed by the Appellate Authority and we find that the Appellate Authority has not discussed any facts nor dealt with the grounds which have been raised by the assessee, though the grounds have been extracted in the order passed by the Appellate Authority. Thereafter, Appellate Authority referred to the various decisions and ultimately, the conclusion holding that the assessee had not proved the three ingredients required u/s 68 of the Act. We are of the view that there is no discussion on facts despite the assessee having appeared before the Appellate Authority. Therefore, we are of the view that the assessee should not be left remediless and should be given an opportunity to put forth their case on merits. Since the assessment proceedings were based on judgment assessment, we are inclined to remand the matter back to the Assessing Officer for a fresh consideration. The order passed by the learned Tribunal, the order passed by the Appellate Authority and the assessment order are set aside and the assessment is restored to the file of the Assessing Officer, who shall complete the assessment after affording an opportunity of personal hearing to the authorized representative of the assessee.

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• 2025 (3) TMI 1005
  Levy of penalty u/s 271 (1) (c) - addition of unexplained cash credit u/s. 68 on sale of shares of penny stock falsely claimed by the assessee as Long-Term Capital Gains exempt u/s 10(38) -Tribunal while granting relief to the assessee, made an observation that for levying penalty u/s 271 (1) (c), stricter yardstick of culpability is required to be established. HELD THAT:- This finding of ITAT, in our view, is not legally sustainable. We support our conclusion by placing reliance on the decision of Union of India Ors. vs. Dharamendra Textile Processors Others [ 2008 (9) TMI 52 - SUPREME COURT ] held that the explanations appended to Section 271 (1) (c) of the Income Tax Act entirely indicates the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing return. It was further held that the judgment in Dilip N. Shroff [ 2007 (5) TMI 198 - SUPREME COURT ] has not considered the effect and relevance of Section 276-C of the Income Tax. The object behind the enactment of Section 271 (1) (c) read with explanations indicates that the said Section has been enacted to provide for a remedy for loss of revenue. The penalty under the proceedings is a civil liability and willful concealment is not an essential ingredient for attracting civil liability as in the matter of prosecution under Section 276-C of the Income Tax Act. Accordingly, it was held that the decision in Dilip N. Shroff s case was not correctly decided but SEBI s case has analyzed the legal position in the correct perspective. In the light of the decision in Dharamendra Textile Processessors, the observations made by the learned Tribunal which appears to suggest that the culpability has to be established does not lay down the correct legal principle. Therefore, we are inclined to set aside that portion of the order passed by Tribunal while interpreting the provisions of section 271 (1) (c) of the Act as it is not in consonance with the decision of Dharamendra Textile Processors [supra] With regard to the penalty which has been imposed on the assessee, considering that the penalty is less than Rs. 5 lakhs and the assessee being an individual, we do not propose to interfere with the relief granted by the learned Tribunal to the assessee by deleting the penalty. Therefore, to that extent the order is affirmed. Decided in favour of revenue.

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• 2025 (3) TMI 1004
  Entitlement to condone delay in filing a corrected return condoned u/s 119(2) - petitioner had committed a mistake in showing the correct information in column-15 and column-18 and have clubbed the dis-allowance of expenditure claimed under Section 37 in column-23 which was pointed out by the CPC while analyzing the return as per the Centralized Processing of Returns Scheme, 2011 HELD THAT:- CPC issued the intimation dated 03/09/2019 pointing out the mistake in the return and therefore the petitioner was called upon to submit the response thereto. The petitioner having found such mistake has therefore rightly filed a corrected/revised return u/s 119 (2) (b) of the Act as the time to file the revised return had already expired on 31/03/2019 as per the provision of Section 139 (5). The respondent was therefore only required to consider such revised return as there was only a correction of the mistake in the presentation of the correct figures in the column-15 and column-18 instead of clubbing the same in column-23 of the return and instead thereof, the respondent has enlarged the scope of Section 119 (2) (b) by not redressing such minor corrections to be made in the return of income and has rejected the same on the ground of genuine hardship and advising the petitioner to avail the other legal resources u/s 254 or Section 154 unmindful of the fact situation that there was no impact on the corrected return on the taxable income of the petitioner and it was only to facilitate the CPC to process the return so that the petitioner is entitled to the refund, if any, so as to compute the taxable income of the petitioner in accordance with law as provided under Section 143 (1) (a) of the Act. The respondent no.2 ought to have allowed the applications to condone the delay in filing the corrected/revised return which was a formality only as only the correct presentation in Form-ITR-6 was not made by the petitioner which has prevented the CPC from processing the return. These petitions succeed and are accordingly allowed. Impugned order dated 24/08/2023 passed u/s 119 (2)(b) is hereby quashed and set aside and the delay in filing the revised return is hereby ordered to be condoned and respondent no.1 is directed to process/transmit the revised return filed by the petitioner on 06/09/2019 to CPC to process the same in accordance with law.

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• 2025 (3) TMI 1003
  Review petition - proviso to Section 2(15) not applicable to the respondent - ITAT has allowed the appeal and has held that the proviso to Section 2(15) is not applicable to the respondent / review petitioner and has set aside the order passed by CIT (E) u/s 263 by which the matter was remanded back to the AO for fresh assessment. Whether the factual aspect as available in the present case and the ground which has been agitated is available to exercise the power of review? - HELD THAT:- This Court is of the view that since the Co-ordinate Bench has passed order on the concession given by the learned counsel appearing for the review petitioner and the matter has been remitted before the authority to decide afresh in view of the judgment passed by the Hon ble Apex Court, hence, this case is not coming under the fold of the power which is to be exercised under the jurisdiction of review. On the basis of the discussion made herein above and taking into consideration the ratio laid down by the Hon ble Apex Court in the case of Sanjay Kumar Agarwal Vrs. State Tax Officer (1) Anr. [ 2023 (11) TMI 54 - SUPREME COURT ] and in the case of Rimpa Saha [ 2025 (1) TMI 1525 - SUPREME COURT] ] is of the view that no ground is available to review the order passed.

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• 2025 (3) TMI 1002
  Writ of Mandamus directing the respondents/Income Tax Department to invoke a detailed investigation based on representation made - one Srinivasan, (who was an ex-employee of the petitioner) has lodged a complaint alleging that the petitioner owes a sum of Rs.5 crores to him, which, according to the petitioner, is utter fallacious, as the said Srinivasan does not even had a source of income to pay such huge amount to the petitioner HELD THAT:- The said Srinivasan does not even had a source of income to pay such huge amount to the petitioner, therefore, in this regard, he made a representation to the respondent-Income Tax Department to find out the source of income of the said Srinivasan, whether he is an income tax assessee; whether he is filing any return of income; whether he is capable of having such huge amount with him, such other informations. Thus, this Writ Petition is nothing but an attempt made by the petitioner to collect information from the respondent-Income Tax Department as regards the source of income of the sixth respondent, which, cannot be considered by this Court. If it is the grievance of the petitioner that the said Srinivasan had lodged a false complaint against the petitioner and that, the said Srinivasan cannot afford to give such huge sum of money to the petitioner, it is for the respondent-Police Department to act upon based on such complaint made by the sixth respondent and if the respondent-Police finds such complaint to be genuine and files any chargesheet and passes any final orders, only in such case, the respondent-Income Tax Department may come to the rescue of the petitioner to find out the source of income of the sixth respondent. Thus, as rightly pointed out respondent-Income Tax Department, unless and until any chargesheet is filed and final orders is passed based on the complaint lodged by the sixth respondent, the respondent-Income Tax Department would not come to the rescue of the petitioner to find out the source of income of the sixth respondent, in the absence of the same, the respondent-Income Tax Department cannot be expected to act upon based on such complaint. WP dismissed.

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• 2025 (3) TMI 1001
  Nature of expenditure - expenditure incurred on replacement of old machinery by new machinery - Revenue or capital expenditure - HELD THAT:- In view of this admitted position, we propose to decide this issue, based on the factual position that the production capacity has not increased. In fact, the Departmental Representative accede to the fact that the production capacity has not been enhanced, but only states that that is not the sole relevant parameter. Schedule M establishes categorically that there is no increase in the production capacity either in RR Nagar factory or in Jayanthipuram factory which remain constant at 7, 50, 000 and 11, 00, 000 tonnes per annum respectively both pre and post the year of replacement. In the RR Nagar factory in fact, the actual production for the year ending 1996-97 is in excess of the installed capacity. This is attributable, according to the learned assessee counsel on instructions, to improved technology and better production efficiency. Thus, seeing as the installed capacity has remained constant over the years in question without there being any increase thereof, we are of the considered view that the expenditure incurred would be revenue in nature. Decided against the revenue. Eligibility for benefits u/s 35(i)(iv) while the matter is pending before the competent authority - HELD THAT:- This very issue has come up for consideration in [ 2024 (12) TMI 1542 - MADRAS HIGH COURT] we have decided the question adverse to the assessee following an order of the Tribunal for AY 1996-97 that has not been agitated by the assessee but accepted. Hence, and in the interests of consistency, this substantial question of law is answered in favour of the revenue. Allowance of 100% depreciation to fly ash silo treating it as a pollution control equipment - HELD THAT:- We are of the considered view that the assessee must succeed. It is true that the entry in question reads Ash handling system and evacuation system . The grant of 100% depreciation is thus for a process that must both contain and evacuate fly ash that pollutes the air. It is nobody s case that the silos installed in the factory do not achieve the purpose of handling/containing the pollutant. The mode and manner of disposal is irrelevant so far as it is efficient and achieves the object of removal from the atmosphere. Needless to say, the use of fly ash in the manufacturing process has effectively rid the premises of the pollutant, and in a gainful manner. We wonder what could be a better mode of evacuation. We hence agree with the conclusions of the Tribunal that the method followed by the Assessee for containment and use of fly ash effectively achieves the twin objects of both handling/containing the fly ash as well as evacuates it from the premises by channelising it into the production process. Assessee is entitled for the grant of 100% depreciation in this regard. Decided against revenue. Payment of interest to IFCI - claimed the same as deduction under Section 43B on the ground that the payment had been made prior to the due date - Tribunal has reversed the orders of the lower authorities returning a finding that the claim was in order, since the amount had actually been paid by the assessee - HELD THAT:- We are unable to glean any support for the above conclusion by the Tribunal from the records. Findings of the assessing authority are contrary insofar as the assessee was specifically asked to provide materials in support of the submission that the loan had been disbursed, which it had been unable to do. We too sought such a clarification from the assessee requiring it to produce some material, either by way of bank statement or letter of corroboration from the bank to no avail. Findings of the Tribunal that the amount had actually been paid by the assessee is sans any material to support the same. The provisions of Section 43B, insofar as they relate to the condition of actual payment, call for a strict satisfaction and the failure of the assessee to have produced any material in this regard is fatal to its case. Decided against the assessee. Deduction u/s. 80HHC - excise duty, customs duty, windmill power receipts etc. form part of the total turnover for the purpose of calculating the benefit u/s. 80HHC or not? - HELD THAT:- This issue is to be answered in favour of the assessee by virtue of Sudharshan Chemicals Industries Limited [ 2000 (8) TMI 73 - BOMBAY HIGH COURT] Section 80HHC which is a separate code by itself. Hence, the general definition of the word turnover or the case law dealing with the said definition under the Sales Tax Act which is a State levy, cannot be imported into Section 80HHC of the Income-tax Act. Decided against the revenue. Depreciation on the dumpers - no evidence adduced that they had used it for more than 180 days, or even received the same in their site prior to 180 days - ITAT allowed full claim - HELD THAT:- As no evidence has been produced by the assessee before the authorities to establish that the dumpers had been received in its premises and put to use prior to 01.10.1995. This could very easily been done either by showing gate pass at the time of receipt of vehicles or any other documentation to indicate receipt and use of the same prior to 01.10.1995. Since the assessee has admittedly not done so, we are of the view that the Tribunal ought not to have reversed the orders of the lower authorities. Tribunal proceeds on the concept of passive user which is not applicable to the fact and circumstances of the present case. The benefit of depreciation to a passive user would require the user to establish that it was in possession of the asset but was unable to use the asset for a certain period on account of factors beyond its control. In the present case, even the assessee being in possession of the asset prior to 01.10.1995 is in doubt and has not been established. Hence, we reverse the order of the Tribunal - Decided against the assessee.

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• 2025 (3) TMI 1000
  Writ of Certiorari to quash an impugned order u/s 250 - opportunity of personal hearing to appear through Video Conferencing has not been provided to the petitioner - HELD THAT:-In the present case, the first respondent provided an option to opt for personal hearing either in person or through Video Conferencing. The petitioner has opted for personal hearing through Video Conferencing. However, the respondents have failed to provide an opportunity to the petitioner to appear through Video Conferencing to present the case. Without providing an opportunity of personal hearing to the petitioner, the impugned order was passed on 19.06.2024. If any order is passed without providing an opportunity of personal hearing, it is clearly amounts to violation of principles of natural justice. When the respondent intended to pass orders against the petitioner, it is the bounden duty of the respondent to provide an opportunity of the personal hearing through Video Conferencing, as the petitioner opted to appear through Video Conferencing to present his case. When the Video Conferencing option was opted by the petitioner, such option was not provided by the respondent. Thus, it violates the principles of natural justice, and on this score alone, the present impugned order is liable to be set-aside.

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• 2025 (3) TMI 999
  Reopening of assessment u/s 147 - Addition u/s 68 - reopening notice beyond more than four years - HELD THAT:- The assessee has furnished clinching evidences before the AO during the course of the original assessment proceedings to prove the transactions. Therefore, by no stretch of imagination it can be said that the assessee failed to disclose truly and fully all material necessary for its assessment for the year under consideration. No hesitation in setting aside the impugned notice u/s 148 thereby quashing the resultant assessment order. We would now address to the merits of the case. As mentioned elsewhere the assessee has furnished all the documentary evidence thereby establishing the identity, creditworthiness and genuineness of the transactions and discharging completely the initial onus cash upon it by the provisions of Section 68 of the Act. The assessment orders of the two companies M/s. Tremendous Mining Minerals Pvt. Ltd and M/s. Sur Buildon Private Limited are also discussed hereinabove by which the impugned transactions have been accepted in the respective cases. Therefore, the same transactions cannot be treated as bogus and colourable in the hands of the assessee. Even on the merits of the case, the additions do not stand and, therefore, we direct the AO to delete the impugned additions. Appeal of the assessee is allowed.

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• 2025 (3) TMI 998
  Denial of exemption claimed u/s 10(26BBB) - HELD THAT:- Respectfully following the order of the Tribunal [ 2019 (1) TMI 1267 - ITAT DELHI] and in view of identical facts for the present Assessment Year also, the assessee s claim for exemption u/s 10(26BBB) is rejected by the AO is confirmed. Further, in view of Form No.8 declaration filed u/s 158A of the Act by the assessee, the assessee/the AO after receipt of the order of the Hon ble Uttarakhand High Court in the aforesaid [ 2020 (10) TMI 1398 - UTTARAKHAND HIGH COURT] in assessee s own case may furnish suitable application in terms of section 158A(5) of the Act and as per the procedure laid down in section 158A of the Act. Decided against assessee.

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• 2025 (3) TMI 997
  Disallowance of interest earned during the set-off of business - Addition under the head Income from other sources concluding interest earned prior to the commencement of the business is taxable as Income from other sources - CIT(A) deleted addition - HELD THAT:- We find that there is no case of department as to how disputed interest is not inextricable linked with the setting up of the plant. The nature of deposits have been duly examined in AY2018-19 and found to be inextricable linked with the setting up of the plant. Since, the above fund inextricable linked with the setting up of the plant, the decision of Bokaro Steels Limited [ 1998 (12) TMI 4 - SUPREME COURT] is clearly applicable in applicant s case and ld. CIT(A) has not erred in relying the same. The grounds have no substance. Disallowance of premium received on the shares issued - AO made addition of book share premium of shares @Rs.2/- as excessive share premium per share due to the reason that, identity, genuineness and creditworthiness of the investor was not proved - CIT(A) deleted addition - HELD THAT:- Conclusion of ld. CIT(A) that the allotment of shares to an existing shareholder cannot be construed to be an investor whose identity and creditworthiness were not proved, needs no interference. We find that ld. CIT(A) has also held that during the immediate preceding year, the same share premium of Rs. 2/- per share has been received from the said shareholder. It is also observed from the submission of the appellant that, the said value of Rs. 12 per share has been arrived by way of DCF method as prescribed by the Reserve Bank of India which is a prescribed method of valuation in the instant case and the AO also has not found fault with the said method of DCF valuation. Thus disallowance made by the AO u/s 56(2)(viib) on the said receipt of the share premium was not sustainable and direction of deletion by ld.CIT(A) needs no interference. Decided against revenue.

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• 2025 (3) TMI 996
  Addition u/s 68 - Sundry Creditors who failed to respond to the notices u/s 133(6) - as argued no addition could be made under section 68 of the Act, in respect of credit balances at the end of the financial year, if, the purchases from those parties and trading results had been accepted - estimation of Net Profit @ 8% on total turnover Unconfirmed Sundry Creditors - Credit balances do not represent loans or advances taken by the assessee where creditworthiness to extent the advances are essential point for examination. Rather these represent sundry creditors for purchases and the purchases have not been called into question. Therefore, merely because some part of the expenditure for the purchases have not been met during the concerned financial year, is not ground to hold that those credits are bogus, unless it can be shown that those purchases were never made at all. As the Ld. AO has not conducted any exercise to determine the bogus nature of the purchases, in view of the decision of Pancham Dass Jain[ 2006 (8) TMI 582 - ALLAHABAD HIGH COURT] and Ritu Anurag Agarwal [ 2009 (7) TMI 1247 - DELHI HIGH COURT] the decision of the Ld. CIT(A) to delete the additions made on account of unconfirmed Sundry Creditors is upheld. Accordingly, ground no. 1 of the Department appeal is dismissed. Difference in balances reported by Sundry Creditors - As this is a matter of re-conciliation, we restore this matter back to the file of the Assessing Officer so as to give the assessee of the opportunity to re-concile the differences and order that in the event of such re-conciliation being made to satisfaction of the AO, addition should not be made on this account. This ground of appeal is allowed for statistical purposes. Estimation of net profit rate @ 8% - CIT(A) has himself recorded the fact that VAT Authorities have examined and confirmed the sales and purchases of the assessee. In the circumstances, in the absence of finding any fault in the accounts of the assessee, in our opinion the rejection of the books and estimation of the profit @ 8% would not be justified. In any case, the 8% profit is presumptive tax for civil contractors having turnover less than of Rs. 2 crores. The turnover of the assessee is over Rs. 7 crores. In the circumstances, a rate not bearing any relation to the history of the assessee s case or any comparable case cannot be justified. In the circumstances, we find it fit to delete the addition made on account of estimation of net profit and to restore the rate of net profit to that disclosed by assessee in the return. Failure of CIT(A) to consider the VAT assessment and the fact that the assessee supplied only to PSUs, which was the reason for higher estimation of income by him - As already observed that the Ld. CIT(A) has considered the VAT assessment and we observe that he has also recorded the fact of the purchases of the assessee being verifiable as they were from PSUs. However, since the estimation of income by him is at variance with these findings recorded by him in his order, the same is not maintainable. Accordingly, this ground of appeal is allowed.

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• 2025 (3) TMI 995
  Reassessment beyond period of limitation - notice u/s 148A(b) of the Act having been initiated after six years from the assessment year - scope of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) HELD THAT:- Admittedly the notice u/s 148 of the Act was issued on 30.06.2022 i.e. beyond the TOLA period and such a notice under the old regime could have been issued only up to 31.03.2022 and the benefit of extension of due date as per TOLA would be applicable only to the notices issued between 01.04.2021 to 30.06.2021 if the limitation for issuing such notices was expiring between 20 March 2020 and 31 March 2021. The limitation for A.Y. 2015-16 was expiring on 31.03.2022, i.e. beyond the period of 20.03.2020 to 31.03.2022, therefore, the benefit of TOLA would not be applicable. Further, in view of the first proviso to section 149(1) of the Act. The time limit for reopening assessments has been reduced from four years to three years. However, in cases where income that escaped assessment amounts to Rs.50 lakhs or more, assessments can be reopened within ten years. The new regime prohibits reopening of assessments that were time-barred under the old regime. In this case the notice u/s 148 of the Act was earlier issued on 09.04.2021 which was treated as show cause notice u/s 148A(b) of the Act but the order u/s 148A(d) of the Act has been passed on 30.06.2022 and as per the old provisions of reassessment, the notice u/s 148 of the Act after complying with the procedural requirement as per the amended provisions ought to have been issued by 31.03.2022 after excluding the period granted to file the reply in response to the notice u/s 148A(b) of the Act. Since the limitation for issue of notice u/s 148 of the Act expired on 31.03.2022 under the old regime and for AY 2015-16 of the assessment order the notice u/s 148 has been issued on 30.06.2022, the benefit of TOLA for extending the limitation for issue of notice u/s 148 of the Act will not be available to the Revenue. Thus notice issued u/s 148 of the Act on 30.06.2022 is barred by limitation and the assessment order is hereby quashed and appeal of the assessee is allowed.

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• 2025 (3) TMI 994
  Validity of approval granted u/s 153D - as alleged same was done in a mechanical manner - HELD THAT:- Only one approval u/s 153D was granted by letter and by marking check mark ( ) for each year the approvals are shown to have been issued for each year, but, as a matter of fact, there is no change in the No. of letter being F.No.Addl.CIT/CR-7/2021- 22/634 under which the approval u/s 153D of the Act was issued by the competent authority. Thus, there is no dispute that a composite approval was sought and granted in the case of the assessee for assessment years 2014-15 to 2020-21. Approval seems to be some sort of mechanical exercise only because in the corresponding letter from the ld. AO dated 27.09.2021 (supra) only draft orders were submitted for examination. There is no reference that appraisal report or seized documents were also forwarded. In fact, it is pertinent to observe that vide letter dated 27.09.2021 (supra), the AO had made a request that online approval u/s 153D may kindly be accorded. This shows that certainly, the assessment records were not forwarded, what to talk of appraisal report and relevant seized documents. As no data was seized in electronic format from hard drive/CDs/pen drives/mobile data so as to necessitate making these observations by the ld. competent authority. The aforesaid observations and directions only indicate that in a perfunctory manner without application of mind post completion of assessment, on the draft orders the approval has been granted. It is now settled proposition of law that the approval so granted without taking into consideration the assessment record, incriminating evidences and the approval not exhibiting the reasons for granting the approval independently on the draft assessment order cannot be sustained.

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• 2025 (3) TMI 993
  Reassessment proceedings u/s 147 - Valid sanction u/s 151 - prescribed authority as to whether it should be the jurisdictional commissioner or Principal Commissioner under section 151(i) or the Principal Chief Commissioner under clause (ii) of the Act, as the case may be - HELD THAT:- Section 151(ii) approval in the instant case involving escaped income of Rs. 50 lakhs or more, had to be obtained under the new regime from the Principal Chief Commissioner etc. We accordingly adopt the foregoing detailed discussion mutatis mutandis to conclude that the impugned section 148 proceedings herein are not sustainable in law for want of valid section 151(ii) approval in very terms. The impugned reopening/reassessment stands quashed therefore. Appeal of assessee allowed.

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• 2025 (3) TMI 992
  Penalty u/s 271D - Period of limitation - HELD THAT:- In the instant case, the AO has issued reference to the JCIT on 31.07.2019, and therefore, following the decision of Mahesh Wood Products [ 2017 (5) TMI 433 - DELHI HIGH COURT ] the penalty order should have been passed within six months i.e. 31.01.2020. As the JCIT has passed order u/s 271D of the Act on 28.2.2020, we are of the considered opinion that the same is outside the prescribed limit u/s 275(1)(c) of the Act and therefore, time barred. Regarding the second proposition that penalty is time barred as the demand notice was required to be submitted alongwith penalty order, which was not done in the present case, the same is rendered academic as the penalty order itself has been held as time barred and the assessee has succeeded on first ground itself. Decided in favour of assessee.

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• 2025 (3) TMI 991
  Exempt income u/s.10(10AA) - leave encashment on retirement - Benefit of enhanced limit - Assessee was denied the benefit of Notification No.31/2023/F.No.200/3/2023- ITA-1 dated 24-05-2023 which revised the leave encashment limit - HELD THAT:- The Co-ordinate Jaipur Bench decision in the case of Govind Chhatwani [ 2023 (10) TMI 1509 - ITAT JAIPUR] recently the Central Board of Direct Taxes Suomotu revised the limit for deduction u/s 10(10AA) and the revised limit now stood at Rs. 25, 00, 000 as specified vide notification no. 31/2023 issued by the ministry of finance. Since the leave encashment amount as claimed by the assessee which is below the revised limit of leave encashment exempt prescribed by the Board, the assessee is eligible to claim of deduction of said. Based on these observations the AO is directed to allow the claim of the assessee u/s. 10(10AA) within the revised limit as prescribed. In terms of these observations the appeal of the assessee is allowed. We held that the assessee is entitled to get the deduction as claimed in the return of income u/s 10(10AA) as the limit has been increased from 3 lac to 25 lacs. Appeal filed by the Assessee is hereby allowed.

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• 2025 (3) TMI 990
  LTCG - Tax on gift of movable or immovable property by means of transfer - levy of tax based on the holding period - transfer under Section 2(47) - Computation of Capital Gains pertaining to the settlement executed by the assessee in favour of his brother by reckoning the guideline value / stamp duty value as the sale consideration of the each of the property settled while taking the book value as the cost of acquisition - HELD THAT:- Gift transaction that had occurred between relatives (Brothers in the present case) should be reckoned as settlement so as to reckon the same as not a transfer for the purpose of settlement in Section 2(47) r.w.s 45/48. This above fact could not be disputed by the ld. DR when the same was brought to their attention. This Tribunal is of an opinion that attempt of the CIT(A) in clubbing both the settlement deeds (one by the assessee in favour of the brother and the other by the brother in favour of the assessee) was legally erroneous for the consequential erroneous conclusion reached by further reckoning the transaction as exchange for the purpose of justifying the levy of Capital Gains tax. We find force in the argument of the Ld. AR that transaction of settlement between the assessee and his brother for preventing future disputes and transaction of settlement between the brother and the assessee executed simultaneously is to be considered as independent transactions by the stamp duty authority and hence in the light of the stamp duty authority reckoning the deeds as settlement deeds not as exchange, the presumption of altering the legally executed settlement deed as exchange was not permissible in law. The settlement deed(s) as such executed as per the process known to law would definitely fall within the ambit of the exception of Section 47(iii) of the Act and consequently levy of Capital Gains tax would get negated /vitiated. In deciding the issue of settlement deed between the brothers in the case on hand, we take note of the decision of SS Pillai vs. KS Pillai [ 1972 (5) TMI 60 - SUPREME COURT] wherein it was held observed that if in the interest of the family, properties and family peace, the close relatives settle their dispute amicably, this court will be reluctant to disturb the same. Hon ble Madras High court in the case of CIT vs. R. Ponnammal [ 1986 (1) TMI 26 - MADRAS HIGH COURT] members of a joint family may, in order to maintain peace and bring about harmony in the family, enter into a family arrangement and if the arrangement is entered into bonafide and the terms thereof are fair, courts will normally give assent to such an arrangement rather than avoid it. Even if a party to the settlement has no title under the arrangement but the other party relinquishes all his claims or titles in favour of such a person and acknowledges him to be the sole owner, then the antecedent title must be assumed, and the family arrangement will be upheld. Therefore, we cannot agree with the CIT(A) for taxing the settlement deeds of the assessee with his brother considering it as transfer under section 2(47) and hence we are inclined to delete capital gains added by the AO. Assessee appeal allowed.

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• 2025 (3) TMI 989
  TP Adjustment - AMP expenses - application of Bright Line test - HELD THAT:- AMP expenditure quantum alone assessee cannot be said to have benefitted the AEs brand. Brands are not product or services centric, but, more of customer centric. In exercise of brand building or enhancement, it is essential to establish as to how the AMP expenses generated awareness of the brand which was more useful to the foreign AE than to help the assessee in procuring its share of market. AO was, thus, required to establish that the AMP expenses were not for tearing into the local market alone, but, were made at the instance of foreign AE for enhancement and creating a brand value beyond the local market. In the absence of any such facts coming out of a concerted action of the assessee with its foreign AE, or in absence of independent inquiry on the basis of nature of product, services or retail brands catered by the assessee the AO cannot draw any presumption on the basis of AMP expenses quantum or sales that the expenses must have resulted into any benefit to the AE. Therefore, we are inclined to accept the case of assessee that in the given facts and circumstances, Tax authorities were unable to demonstrate that AMP expenses incurred by the assessee were in any way beneficial to the brand of foreign AE requiring TP adjustment. Thus this issue is decided in favour of the assessee. Payment of royalty - If the tax authorities have erred in rejecting the transfer pricing documentation maintained by the assessee in respect of payment of royalty and erroneously determined arm s length royalty rate at 2% of the sales of the assessee - HELD THAT:- The comparable agreements selected by the assessee in its TP documentation maintained for the subject year were rejected by the ld. TPO on account of different geographical reasons, but, the issue was considered in favour of the assessee and further comparable agreements selected by the assessee and the ld. TPO belong to same industry i.e., kitchenware and home furnishing items. Therefore, the rejection of comparable companies selected by the assessee was held to be unjustified. Addition on account of payment of management service, fee - HELD THAT:- Representatives of both the sides submitted that there is no change in facts and circumstances and, in fact, we find that when in the final order passed by the ld. AO, the DRP directions have been followed wherein only in reference to earlier year orders the DRP had re-asserted any directions. Accordingly, the grounds No.8 and 9 before us are also restored to the file of the ld. AO to proceed in accordance with the law as per the directions issued by the coordinate Benches in AY 2013-14 and 2014-15. The ground is sustained for statistical purposes. Interest on outstanding receivable - HELD THAT:- As we find that there is no case of the ld. AO that the AE was charging any interest on account of trade payables from the assessee. We find that the DRP has dealt with this issue observing that the assessee has merely put legal arguments and no submissions on facts and the computation made by the TPO has been presented and, thus, relying in the case of Cotton Naturals, upheld the enhancement done by the ld. TPO. Since the case of assessee is that post undertaking working capital adjustment of comparable companies selected in TP documentation, the margins earned by appellant are more than that of comparable companies. We consider it appropriate to remit the issue with the ld. AO/TPO to examine the issue afresh on the basis if post undertaking working capital adjustment the assessee selected the comparable companies and ratio of judgment in the case of Kusum Healthcare Pvt. Ltd. [ 2017 (4) TMI 1254 - DELHI HIGH COURT] . The ground is sustained for statistical purposes. Payments made to Dart alleged to be royalty - In assessee s own case for AY 2013-14, the issue has been dealt by the Bench in [ 2023 (1) TMI 12 - ITAT DELHI] and the facts before us are not in any way different. Thus we restore the issue to the files of ld. AO/TPO to determine the same afresh. Accordingly, this issue is sustained in favour of the assessee for statistical purposes.

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• 2025 (3) TMI 988
  Adjustment made u/s. 43B - Intimation issued u/s 143(1) - HELD THAT:- A perusal of the Computation Sheet shows that the adjustment made while processing return of income u/s 143(1) have been incorporated. Therefore, in the facts of the present case, it cannot be said that the grievance raised by the Assessee in appeal before the CIT(A) does not rise from the Assessment Order, dated 25/10/2022, passed under Section 143(3) r/w/s 144B of the Act. Accordingly, we accept the contention of the Assessee that in the facts and circumstances of the present case the doctrine of merger would apply. Therefore, we reject the contention of the Revenue that the CIT(A) erred in entertaining and adjudicating the grounds raised by the Assessee in appeal before the CIT(A) challenging the adjustments made while issuing intimation under Section 143(1) of the Act. Accordingly, Ground No. 1 raised by the Revenue is dismissed. CIT(A) had proceeded to grant relief to the Assessee without providing any opportunity to the AO to verify (a) the factual averments made on behalf of the Assessee and (b) the documents filed by the Assessee in support of the same - We do find some merit in the aforesaid contention. The adjustments were initially made u/s 143(1). Admittedly, no submission/documents in relation to the adjustment were filed during the regular assessment proceedings. CIT(A) has proceeded to allow the grounds raised without calling for a remand report. It was contended on behalf of the Assessee that no new evidence was filed by the Assessee during the appellate proceedings before the Tribunal and therefore, the question of calling for a remand report does not arise. Arguendo, even if the aforesaid submission of the Assessee is accepted as correct, we find that the CIT(A) has not recorded any reasoning for accepting the contention of the Assessee. After reproducing the assessment order and the submissions of the Assessee, the CIT(A) has concluded in favour of the Assessee. However, no reasoning has been recorded. The order passed by the CIT(A) is silent as the discrepancy or inadvertent error, if any, in the audit report, financial statements and/or the return of income. The claim of the Assessee could, at best, be regarded as additional claim made by the Assessee in appellate proceedings before the CIT(A). The aforesaid additional claim has been adjudicated on the basis of the material on record by the CIT(A) without any fresh inquiry into facts. Therefore, we do not find any infirmity in the approach adopted by the CIT(A). It is admitted position that updated Form 26AS reflected aggregate TDS credit of INR.12, 76, 37, 773/- for the Assessment Year 2021-2022. In our view, the Assessee is entitled to claim additional TDS credit provided corresponding income has been offered to tax during the Assessment Tear 2021-2022. Accordingly, we direct the Assessing Officer to allow credit for additional TDS of INR.27, 40, 247/- as reflected in updated Form 26AS after verifying that the corresponding income has been offered to tax as income for the Assessment Year 2021-2022. The Assessee is directed to file a statement showing reconciliation statement in support of the contention that the additional TDS credit claimed pertains to income already offered to tax. Accordingly, to his extent the order passed by the CIT(A) is confirmed. In view of the aforesaid, Ground No. 2, 3 and 4 raised by the Revenue are partly allowed. In terms of the aforesaid, Ground No. 5 seeking set-aside of the order passed by the CIT(A) is partly allowed.

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• 2025 (3) TMI 987
  Rejection of application u/s 80G - error regarding the relevant clause u/s 80G(5) - instead of mentioning clause (iii) of first proviso to section 80G(5) in the application in Form No.10AB, the assessee mentioned clause (ii) of first proviso to section 80G(5), which is applicable to the trusts which already have regular approval and the application is made for the renewal of the same HELD THAT:- We are of the considered view that the error committed by the assessee is merely inadvertent and clerical, as the facts and circumstances of the case only require filing the application under clause (iii) of first proviso to section 80G(5). We find that the impugned order is completely silent on any opportunity being granted to the assessee to rectify the error and file the revised application in Form No.10AB under clause (iii) of first proviso to section 80G(5) of the Act. Accordingly, we restore the matter to the file of the learned CIT(E) to grant an opportunity to the assessee to file the revised application in Form No.10AB under clause (iii) of first proviso to section 80G(5) of the Act and decide the same in accordance with law. With the above directions, the impugned order is set aside and grounds raised by the assessee are allowed for statistical purposes.

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• 2025 (3) TMI 986
  Taxability of the payments received under consideration, i.e., hire charges for bareboat dredgers - AO classified the said income of the Appellant as Royalty as well as Business Income - HELD THAT:- Appellant merely supplies dredger to ISDPL on hire on bareboat basis. As evident from Article 12 of India-Netherlands DTAA that term Royalty does not include payments for the use or right to use industrial, commercial or scientific equipment, as mentioned by the AO in the SCN. The judgment in the case of Van Oord ACZ Equipment BV [ 2014 (11) TMI 605 - MADRAS HIGH COURT ] and Tribunal in the case of DDIT v. Nederlandsche Overzee Baggermaatsehappiji BV [ 2010 (5) TMI 674 - ITAT MUMBAI ] and M/s International Seaport Dreding Ltd. [ 2016 (7) TMI 1699 - ITAT CHENNAI ] also strengthen the argument of the assessee that hire charges of bareboat charter would not constitute Royalty and hence, not taxable as Royalty under Article 12 of India-Netherlands DTAA. We also note that the word plant in India-Beligium DTAA under Article 12 is a typographical error for word plan . This factual error has been acknowledged in the Notification S.O.54 [NO.20 (F.NO.505/2/89-FTD] Dated 19.01.2001. Hence, we are of the considered view that hire charges of bareboat charter does not fall under the garb of definition Royalty and hence, not taxable as Royalty under Article 12 of India-Belgium DTAA. We have gone through the judgments in the cases of R.D. Aggarwal [ 1964 (10) TMI 9 - SUPREME COURT ], Carborandum Co. [ 1977 (4) TMI 2 - SUPREME COURT ] Ishikawajma-Harima Heavy Industries Ltd. [ 2007 (1) TMI 91 - SUPREME COURT ], Metror Sattellite Ltd. [ 1979 (6) TMI 25 - GUJARAT HIGH COURT ] and Netherlandsche Overzee Baggermaatsehappiji BV [ 2010 (5) TMI 674 - ITAT MUMBAI ] and also taking guidance therefrom, it is clear from the above facts that the appellant has no business connection in India or PE. We also find that the AO without adherence to the principles laid by the Hon ble Courts in above referred cases has held that assessee has business connection and PE in India is devoid of merit. Since, assessee does not constitute a PE in India, therefore attribution of profits to PE does not arise. The issues in controversy revolve and hinges upon the survey carried out on M/s International Seaport Dredging Private Limited on 17.02.2017 and statements recorded. It is settled in the case of CIT v. S. Khader Khan Son [ 2013 (6) TMI 305 - SC ORDER ] affirming the decision of the materials collected and the statement recorded during the survey u/s 133A are not conclusive piece of evidence by itself. We also find that the persons whose statements were recorded by the revenue have not passed the muster of cross examination by the assessee. Hence, what has been stated in the statement made u/s 133A of the Act in the case of other assessee cannot be treated as gospel truth. Therefore, we refrain ourselves to endorse the same. Before parting with the order, we must make it clear that we have somehow avoided reproducing the sections, case laws and facts again. We have already narrated the sections, case laws and facts while dealing with submissions of the parties. Appeal of the assessee is allowed.

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• 2025 (3) TMI 985
  Revision u/s 263 - wrong application of provisions of section 194I - HELD THAT:- It is pertinent to note that the tax to be deducted at source u/s 194I is 10%, whereas the tax to be deducted at source u/s 194C of the Act is 2%. PCIT says the AO ought to have applied the provisions of section 194C as per the decision of PURI CONSTRUCTIONS [ 2024 (2) TMI 756 - DELHI HIGH COURT] . We find that the AO had erred on the revenue side by charging 10% TDS rate as per section 194I of the Act in the instant case and hence there cannot be any prejudice that could be caused to the interest of the revenue in the instant case. The order passed by the Learned AO is prejudicial to the interest of the assessee and the revision order passed by the CIT is prejudicial to the interest of the revenue. Hence the mandatory twin conditions for initiation of revision proceedings u/s 263 does not get satisfied in the instant case and respectfully following the decisions in the case of Malabar Industrial Co [ 2000 (2) TMI 10 - SUPREME COURT] and Max India Ltd [ 2007 (11) TMI 12 - SUPREME COURT] we have no hesitation to quash the revision order passed by CIT u/s 263 of the Act. Accordingly, the grounds raised by the assessee are allowed.

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• 2025 (3) TMI 984
  Penalty imposed u/s 43 of the Black Money Act - Failure to disclose foreign assets in the income tax return - HELD THAT:-Admittedly, the appeal filed by the assessee against the quantum assessment proceedings, before Coordinate bench, ITAT, Jaipur Bench was allowed, but, the legal proposition as rightly put forth by ld. DR for the appellant, and not controverted on behalf of the assessee, is that quantum assessment proceedings are different from the proceedings for levy of penalty. Therefore, the observations made by the Coordinate Bench in the quantum assessment proceedings were of no avail to the assessee in the penalty proceedings. CIT(A) was of the view that revised return replaces the original ITR and that same was accepted by the AO. From the above reason, it is obvious that CIT(A) did not go into merits, as to whether the appellant was required to disclose asset in Schedule FA or not, and rather, he set aside the penalty having regard to the disclosure made in the revised return. CIT(A) should have discussed the above said point first and then proceeded further to decide the validity of the impugned penalty order. We are in agreement with CIT(A) that furnishing of revised return certainly replaces the original ITR, and accordingly, for the year under consideration i.e. AY 2017-18, CIT(A) was justified in setting aside the penalty order, once the assessee, even though after search action, came forward to disclose the foreign assets by furnishing revised return. Decided against revenue.

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• 2025 (3) TMI 983
  Denial of Foreign Tax Credit claimed - assessee has filed Form 67 after filing return of income u/s 139(1) - HELD THAT:- Identical issue came up in the case of Neha Kapoor [ 2023 (9) TMI 31 - ITAT DELHI] wherein held Rule 128(9) of the Rules does not provide for disallowance of FTC in case of delay in filing Form No.67; (ii) filing of Form No.67 is not mandatory but a directory requirement and (iii) DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act - Thus, we direct the AO to accept Form 67 filed by the assessee and allow Foreign Tax Credit in accordance with law. Also see Ajay Kumar Mishra [ 2023 (6) TMI 363 - ITAT DELHI] - Decided in favour of assessee.

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• 2025 (3) TMI 982
  Rectification of mistake u/s 254 - non-adjudication of the ground of appeal concerning the grant of TDS credit by the CIT(A) - HELD THAT:- As assessee is entitled for credit of TDS in view of section 199 of Income Tax and the AO is duty bound to allow the same as per Rule. Coming to the MA, we find that the assessee has not raised the specific ground for grant of TDS in Form-36 before us. AR has also not argued this ground during the course of hearing. We therefore are of the opinion that if the assessee has neither raised a specific ground, nor argued it before the ITAT, the Tribunal cannot be expected to adjudicate the matter. As per Section 254(2) of the Act, the scope of MA is limited to rectify apparent mistakes in the order of ITAT. An error must be apparent on the face of record and not require extensive arguments or deliberation. As in the case of ACIT v. Saurashtra Kutch Stock Exchange Ltd [ 2008 (9) TMI 11 - SUPREME COURT] has clarified that a mistake apparent from record must be obvious and patent and not something that requires investigation or arguments. As the assessee has not raised the issue as a specific ground of appeal, nor the AR argued this issue during ITAT hearing, the MAs filed by the assessee are dismissed.

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• 2025 (3) TMI 949
  Reference to TPO w/o providing opportunity for the petitioner to be heard - validity of Notice to transfer case to TPO u/s 92CA and transfer of case to the TPO as per the approval granted by the Principal Commissioner of Income Tax-1 - HELD THAT:- Respondent no. 1 has made a proposal dated 24.12.2019 in a great hurry after issuing notice under section 142 (1) of the Act calling upon the petitioner to furnish the accounts and documents specified therein on or before 24.12.2019 at 12:15 PM as per Annexure to such notice. Respondent no. 1 made a proposal to the Principal Commissioner of Income Tax-1 on the next day i.e. 24.12.2019 wherein it is recorded that one more opportunity was provided vide notice dated 23.12.2019 fixing the date of hearing on 24.12.2019 however, in response no one attended and no reply was received. Reasons for making transfer was also recorded on 24.12.2019 and thereafter the Principal Commissioner of Income Tax granted approval also on 24.12.2019. Thus the petitioner was never provided any opportunity to make submissions as per notice dated 23.12.2019. It is apparent that while making reference to the respondent no. 2, respondent no. 1 has overlooked and ignored the jurisdictional requirement of providing an opportunity of hearing in accordance with para no. 3.4 of the Instruction No. 3 of 2016 when there ought to be income or a potential of an income arising and/or being affected on determination of the ALP of an international transaction or specified domestic transaction and merely reliance was placed on the Assessment Year 2016-2017. It is also emerging from the undisputed facts of the case that further opportunity of hearing granted on 23.12.2019 was only an empty formality resulting into breach of principle of natural justice. For the foregoing reasons, the petition succeeds. The impugned reference made by respondent no. 1 to respondent no. 2 is hereby quashed and set aside and notice as well as the approval granted by Principal Commissioner of Income Tax dated 24.12.2019 are hereby quashed and set aside.

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• 2025 (3) TMI 948
  Transfer u/s 127 - transfer of case of the petitioner to Pune on the ground that the petitioner was having significant suspicious cash transactions with M/s. G.K. Associates which is assessed with DCIT Central Circle-2(2), Pune - Denial of principles of natural justice by not providing the petitioner with the necessary documents and information relied upon for the transfer of the case Whether the corrigendum orderby providing further opportunity of hearing issued by the respondent was beyond the scope of the original order? HELD THAT:- Assessing Officer acquires the jurisdiction as per provisions of section 124 (1) of the Act for assessment whereas section 127 (1) of the Act provides for powers to the concerned authority to transfer any case of an assessee from one Assessing Officer to another Assessing Officer or officer subordinate to such authority. Such powers can be exercised only after giving assessee a reasonable opportunity of hearing and recording the reasons for the same. As per the provisions of section 127 of the Act, requirement of transferring the assessment in appropriate cases would have element of public interest and the assessee has no choice to select his Assessing Officer. Therefore, respondent no. 1 has passed the corrigendum order by providing further opportunity of hearing to the petitioner vide notice dated 21.12.2024 so as to comply with the mandatory requirement of providing opportunity of hearing and after recording the reasons, case is found to be fit to be transferred from Vadodara to Pune. Contention raised on behalf of the petitioner that impugned notice and order being corrigendum notice and order containing further details is without jurisdiction, is not tenable as the same are in continuation of order dated 29.11.2023 so as to comply with the provisions of the Act to provide opportunity of hearing to the petitioner. It is not in dispute that the petitioner has not filed any reply to the notice dated 21.12.2024 and now it is contended that the petitioner did not file reply as the said corrigendum notice referred to details relied upon to transfer case. Such approach of the petitioner cannot be accepted to quash the impugned order. In view of the provisions of section 127 and conspectus of law enumerated here in above, power of transfer of case of the petitioner cannot be said to have been exercised without jurisdiction or contrary to the material on record to justify such action. We are therefore of the view that we should not interfere with the impugned corrigendum order of transfer passed by respondent no. 1 under section 127 (2) of the Act.

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• 2025 (3) TMI 947
  Taxability in India - Taxation of short-term capital gains on sale of rights entitlement - Whether capital gain earned from sale of rights entitlement can be claimed as exempt under Article 13(6) of India-Ireland DTAA which provides that gains from transfer / alienation of any property other than those mentioned in Articles 13(1) to 13(5) shall be taxable only in Ireland? - HELD THAT:- As per view taken by the ld. DRP to hold that rights entitlement shares and the shares are closely related assets, we are in agreement with the contention raised by the ld. Counsel that these are separate assets and it distinct of the shares of the Indian Government. Accordingly, we hold that rights entitlements is not covered under Article 13(4) and Article 13(5) so as to be taxed in the country of source i.e. in India, albeit, it falls under Article 13(6) whereby, gain on alienation of any property which are not covered in para 1 to 5 is taxable only in the resident state i.e. Ireland. Adjustment of short term capital gain arising on sale of rights entitlement - Capital loss incurred under the provisions of the Act r.w. Article 13(5) of India-Ireland DTAA cannot be set off against short term capital gain derived from sale of rights of entitlement because such case is not subjected to tax in India as per Article 13(6) of DTAA and therefore, assessee has rightly excluded from the computation of total income, accordingly, this issue is decided in favour of the assessee. Error in the computation sheet appended with the order wherein AO has erred in considering that a sum is refunded to the assessee, whereas, the assessee has not received any such sum - As stated that though application u/s.154 has been filed but it has not been disposed of by the ld. AO. Accordingly, we direct the ld. AO to consider the rectification application filed by the assessee and rectified the aforesaid mistake apparent from the record.

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• 2025 (3) TMI 946
  Scope of limited scrutiny proceedings - Deemed dividend addition u/s 2(22)(e) - HELD THAT:- Once the case is selected for limited scrutiny under CASS for certain issues, AO cannot make any other addition by travelling beyond the issues for which the case was selected for limited scrutiny without taking the mandatory permission from the concerned PCIT / Pr.CIT for conversion of such limited scrutiny to complete scrutiny . It is the settled proposition of law that the CBDT circulars are binding on the department and it has to be strictly followed by the officers of the department. Since the AO in the instant case has travelled beyond the issues for which the case was selected for limited scrutiny without taking mandatory permission from the concerned PCIT or Pr.CCIT, therefore, the addition u/s 2(22)(e) of the Act made by the AO which was not the issue as per limited scrutiny, cannot be sustained. We, therefore, allow the additional ground raised by the assessee and direct the AO to delete the addition made by him u/s 2(22)(e) - Decided in favour of assessee.

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• 2025 (3) TMI 945
  Bogus charges for installation of electricity poles, bogus purchases - addition on the basis of a search and seizure operation proceedings - HELD THAT:- CIT(A) has very meticulously examined the evidence of each of the suspicious or doubtful vendors. Nothing could be cited before us to allege that the appreciation of evidence and inferences drawn on the basis of evidences was so perverse so as to be interfered with in these appeals. We are of considered view that when the only ground of revenue to challenge the findings of FAA is that appreciation of evidences or information is erroneous then ld. DR should be able to show some absurdity or perversity in the inferences drawn which is not at all the case here. AO had made the addition on the basis of a search and seizure operation proceedings and the reason for doubting the transaction was failure of the assessee to file necessary evidences showing that the purchases from material supplier was not bogus. On the other hand CIT(A) has examined the party wise additions on the basis of evidences filed by the assessee and their evidentiary value. AO has not doubted the fact of allotment of contract to the assessee and that the assessee had completed the contracts as per the work orders. Certainly, the completion of the contracts of the nature of street-lighting of various roads belonging to MCD would have required use of definitive material, in terms of quality and quantity. There may be allegation of escalation of prices and the matter may have be investigation by other agencies but that did not dispense with onus on the ld. AO, to cite discrepancy in the evidences of assessee to allege bogus expenditure on labour or material. Thus without bringing anything to discredit the expenditure in terms of labour and other charges corresponding to the use of the material in completion of the work order, AO had doubted the expenditures which have been rightly deleted by CIT(A) and findings need no interference. The grounds in hand deserve to be rejected. Addition made on substantive basis and protective addition - cash found the locker - HELD THAT:- What is material is that when the promoters of the company had made it clear on the day of search itself that the cash belonged to the company thereafter there is no finding of fact by the ld. AO that the books of accounts did not reflect such cash balance on the day of search. Assessee has duly submitted before the ld. AO, copies of imprest accounts standing in the names of Mr. T.P. Singh and Mr. J.P. Singh in the books of the company and same have been relied by the ld. CIT(A) to delete the addition. There is no error in the findings of ld. CIT(A) that the ld. AO has simply brushed them aside holding it as an after-thought. There is no error in the conclusion of CIT(A), that the amount found in the locker being Rs, 2 lacs also cannot be considered as unexplained cash as it has been submitted that the said amount represented savings of Mr. T.P. Singh and his family. CIT(A) has noted that Mr. T.P. Singh s wife was also working in a public sector undertaking. Considering the quantum of the amount found in the locker, we approve the conclusion of ld. CIT(A) to treat it as explained cash when the same could be explained by long years of savings of the family. Therefore, the addition made on account of unexplained cash is rightly deleted. Disallowance of bad debts being bad debts written off - CIT(A) deleted addition - HELD THAT:- There is no error in the findings of CIT(A) that assessee is only required to show that he has written off the bad debts in his books of accounts. The judicial pronouncements are uniform in this regard that it is the reasonable decision of the assessee which is relevant in examining whether a particular debt has become bad or not. In the present case it is an undisputed fact that due to allegations of the loss and mismanagement in the contracts awarded in connection with Commonwealth Games 2010, several government agencies were investigating the affairs. Because of this, MCD had refused to release the payments. Therefore, it would unreasonable to argue that the amount lying with MCD had not become bad merely because the appellant had not yet exhausted the legal remedies. Considering all these factors the deduction for bad debts written off claimed by the appellant is rightly allowed by the ld. CIT(A). The ground has no substance.

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• 2025 (3) TMI 944
  TP adjustment - MAM - proper method either TNMM or CUP - TPO adopting an aggregated approach to benchmark transactions - assessee during the assessment, submitted that it has separate divisions called Craft division and maintained separate income and expenses details before TPO - TPO has rejected the same by observing that the assessee did not provide the basis for cost allocation between two segments and the assessee followed the billing on cost to cost basis - TPO proceeded to combine the whole international transactions HELD THAT:- TPO has grossly rejected the submissions of the assessee on the separate craft division s revenue and cost by observing that the assessee has not submitted the relevant basis of allocation of cost between the divisions. TPO carried the assessment with the bench marking of all the international transactions carried by the assessee combining the payment of fees for various IGS services received by the assessee as well as receipt of IGS services by the assessee. Bench marking of payment and receipt of revenue cannot be combined to bench mark the transactions adopting the same OP/OC or OP/OR. The bench marking must be carried out separately for payment of services and receipt of IGS from the AEs. Therefore, adopting the same OP/OC for all the transactions are not justified. TPO has rejected the craft divisions segment result raising doubt on the basis of allocation. He could have asked the assessee to resubmit or give them proper opportunity to make submissions in this regard. He completed the assessment with the preconceived notions that all the transactions carried by the assessee are similar overlooking the diversity of IGS involved. Therefore, we are inclined to remit this issue back to the TPO to redo the bench marking of the transactions of services rendered by the assessee to its AEs by applying the proper method either TNMM or CUP as per the method provided under the rule 10D of Income Tax rules. TPO has proceeded to complete the assessment combining all the services without bench marking the separate IGS rendered and provided by the assessee. Therefore, we are inclined to remit the issue back to the file of AO/TPO to bench mark the IGS provided by the assessee separately de novo after giving proper opportunity of being heard to the assessee. Decided in favour of assessee for statistical purposes.

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• Customs

• 2025 (3) TMI 981
  Classification of imported goods - Roasted Areca Nuts - to be classified under Chapter Heading No. 2008 19 20, as claimed by the petitioner, or under Heading No. 080280, as suggested by the respondents - respondents requirement for the petitioner to submit a provisional bond and Bank Guarantee of 25% of the differential duty for provisional release of goods - HELD THAT:- The petitioners are directed to deposit reduced security amounts and ordered the respondents to issue provisional release orders within three days of deposit. The final assessment was to be expedited following the receipt of the petitioners replies and evidence. Petition disposed off.

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• 2025 (3) TMI 980
  Seeking setting aside of the seizure of the gold Kada - waiver of SCN and perosnal hearing - no SCN was issued and more than one year has elapsed since the detention - HELD THAT:- There was waiver of show cause notice and no personal hearing was also granted to the Petitioner. As per the operative portion of the order, there is complete confiscation of one elongated gold piece bent in kada shape. This Court is of the opinion that following the decision in Mr. Makhinder Chopra v. Commissioner of Customs [ 2025 (3) TMI 19 - DELHI HIGH COURT] , waiver of show cause notice and waiver of personal hearing in standard format is contrary to law. It appears to the Court that even in the present case it is a standard form waiver. Under these circumstances, the order in original cannot be sustained and the same is accordingly quashed. The gold Kada be released, however, subject to payment of storage charges - Let the Petitioner approach the Customs Department for release of said Kada. Conclusion - The gold Kada is ordered to be released to the Petitioner, subject to payment of storage charges, as the confiscation could not be sustained. Peition disposed off.

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• 2025 (3) TMI 979
  Seeking provisional release of imported goods u/s Section 110A of the Customs Act, 1962 - old and used tyres - HELD THAT:- This petition is disposed of with a direction to the petitioner to prefer an Appeal challenging the order dated 6th February, 2025 rejecting the application for provisional release within a period of two weeks from today. The Appellate Authority shall decide the Appeal within a period of four weeks from the date of receipt of copy of such appeal memo after giving an opportunity of hearing to the petitioner. It is clarified that the merits of the matter not entered into, and the further proceedings may be decided by the concerned authorities in accordance with law.

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• 2025 (3) TMI 978
  Classification of imported goods - to be classified as Polystyrene GPPS 1450 in powder form under CTH 39031910 or if they should be reclassified as Polystyrene in granular form under CTH 39031990? - exemption form BCD under N/N. 10/2008-CUS dated 15.01.2008, as amended by N/N. 53/2015-CUS dated 23.11.2015 - levy of penalty on Director of the appellant-company under Section 114AA of the Act - time limitation - suppression of facts or not - Confiscation - interest and penalty - HELD THAT:- When suppression clause is invoked, the Show Cause Notice is to be adjudicated within a period of one year from the date of issue of the notice. In this case, the Notice was issued on 05.07.2018. It was adjudicated within one year. The submission of the appellant in this regard is that there is no suppression of fact established against them in this case and hence the notice should have been adjudicated within 6 months from the date of issue of the notice. It is found that the said notice has been issued by invoking extended period of limitation. The appellant had enjoyed BCD exemption provided under Notification No. 10/2008- Cus. dated 15.01.2008 on the imported goods, Polystyrene GPPS 1450, based on the Certificate of Origin issued by the designated authority of the Country of export i.e., Singapore in respect of the earlier 17 Bills of Entry. However, in respect of the last Bill of Entry No. 4199210 dated 29.11.2017, the sample was tested and found to be in Granular Form - the Department has applied the test report received in respect of the goods imported vide Bill of Entry No. 4199210 dated 29.11.2017 for all the previous imports and charged Customs duty on all the 18 Bills of Entry, which is legally not sustainable. It is observed that the test report received in respect of the goods imported vide Bill of Entry No. 4199210 dated 29.11.2017 is applicable only for that Bill of Entry and the same cannot be applied to all previous imports. The test report in respect of the goods imported vide Bill of Entry 4199210 dated 29.11.2017 cannot be applied to the goods imported earlier under the 17 Bills of Entry, as no samples have been drawn in respect of the said Bills of Entry. In these circumstances, we hold that the demand of Customs duty confirmed in the impugned order in respect of the past imports vide 17 Bills of Entry is not sustainable. Accordingly, the same is set aside. Interest and penalty - Confiscation - HELD THAT:- Since the demand of Customs duty in respect of the 17 Bills of Entry pertaining to past imports is found to be not sustainable, the demand of interest and imposition of penalty on the differential duty confirmed on this count against the appellant-company is also not sustainable and accordingly, the same are set aside. Since, the mis declaration alleged in the previous 17 imports is not established, it is also held that the said goods imported vide those 17 Bills of Entry are not liable for confiscation. Penalty on Director of the Appellant-Company, under Section 114AA of the Customs Act, 1962 - HELD THAT:- Mis-declaration with intention to evade Customs duty has been established in this case in respect of the goods imported vide Bill of Entry No. 4199210 dated 29.11.2017. Hence, penalty u/s 114AA of the Act is liable to be imposed on the Director of the Appellant- Company, but the penalty imposed should commensurate with the duty involved in the said Bill of Entry. In these circumstances, the penalty imposed on Shri Rushab Thakker, Director of the Appellant-Company, u/s 114AA of the Act is reduced from Rs.10, 00, 000/- to Rs.1, 00, 000/-. Conclusion - i) The demand of Customs duty for the past 17 imports is set aside due to lack of evidence of mis-declaration. ii) The demand for the goods under Bill of Entry No. 4199210 dated 29.11.2017 is upheld, with penalties for mis-declaration. iii) The penalty on the Director is reduced, reflecting the lack of evidence of intentional evasion for past imports. Appeal disposed off.

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• 2025 (3) TMI 977
  Undervaluation of transaction value of impoted to evade Customs Duty - HELD THAT:- The Hon ble Supreme Court in Century Metal Recycling Pvt. Ltd. v. Union of India [ 2019 (5) TMI 1152 - SUPREME COURT] , has examined the whole procedure of determining the transaction value of goods, the transaction value of which is doubtful and requires to be redetermined. It held that where the proper officer has reason to doubt the truth or accuracy of the value declared for the imported goods, a two-step verification and examination exercise is required to be carried out. It is found that the Original Authority has not complied with the two-step verification and examination exercise, as stated by the Hon ble Supreme Court. Revenue has not followed the procedure under sub-rule (2) of Rule 12 of CVR, 2007. This was all the more necessary when the proper officer only relied upon a value declared in a statement to arrive at the transaction value. The appellants request for cross-examination of certain witnesses was also denied. The averments made by the appellant in this case show that there has been a challenge to procedural fairness. Rule 9 cannot be given an interpretation which is in violation of Section 14 of the Act. Rules are subservient to the Act and cannot deviate from the provisions of the parent Act. Conclusion - The impugned order is vitiated by the vice of arbitrariness rendered by adopting a fictitious value, which has no sanction under CA 1962 and CVR, 2007, framed there under and hence merits to be set aside. Appeal disposed off.

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• Insolvency & Bankruptcy

• 2025 (3) TMI 976
  Maintainability of section 9 application initiating CIRP - parties had already entered into settlement much before issuance of demand notice which gave rise to the Section 9 application - section 9 application filed ignoring the payments of 20 instalments - HELD THAT:- It is already noticed that when earlier demand notice was issued on 05.03.2018, parties have entered into settlement dated 24.06.2019 revised on 03.07.2020 for final settlement of Rs.8, 30, 31, 244/- equivalent to $1, 110, 489 in 21 instalments last instalment to be paid by March, 2022. 20 instalments were paid and it was only due to some calculation issues last instalment was not paid, however, during the pendency of Section 9 proceeding said instalment was paid. Respondent fairly admitted that entire debt has been discharged. In facts of the present case, present is not a case for initiation of Section 9 proceeding against the Corporate Debtor who after receipt of the demand notice has entered into settlement and paid 20 instalments out of 21 instalments and non-payment of 21st instalment was due to calculation issues regarding amount of last instalment. Hence, present was not a case for initiation of any insolvency proceeding against the Corporate Debtor. Conclusion - Section 9 of the Insolvency and Bankruptcy Code is not to be used as a debt recovery mechanism when a settlement agreement is in place and substantially complied with. Section 9 application filed by the Respondent was inappropriate and unwarranted given the settlement and subsequent payment of the disputed instalment - appeal allowed.

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• 2025 (3) TMI 975
  Homebuyer or an unsecured financial creditor in the insolvency proceedings of the corporate debtor - reimbursement of the amount paid to the bank - HELD THAT:- The present is a case where Appellant on his own request got his unit cancelled and he has filed the claim with respect to the amount which was paid to the corporate debtor towards allotment of the unit as noted above, allotment was made on 04.06.2025 and the entire amount was paid by the UCO Bank to the corporate debtor. No payment was made by the Appellant to the Corporate Debtor. Appellant has brought on the record the order of the DRAT dated 10.02.2021 filed as Annexure A3 of the Affidavit. The Appellant entered into settlement with the Bank and paid Rs.17 lakhs towards full and final settlement of the dues, hence, there are no bank dues with respect to the unit in question. Adjudicating Authority in the order although has noticed the amount of Rs.29 Lakhs is reflected as payable by the Corporate Debtor in its books of accounts and the Resolution Professional shall intimate the bank about the amount payable to them forthwith - the Appellant has already paid the amount to the bank and all dues of the bank are settled with the Appellant. The Resolution Professional shall ensure that the amount of Rs.17 lakhs which was paid by the Appellant is paid to the Appellant from the amount reserved in the Resolution Plan. Counsel for the Resolution Professional submitted that the Appellant having paid the amount, the said amount will be paid to the Appellant. The ends of justice be served in disposing of the appeal directing the Respondent to make payment of amount of Rs.17 lakhs which was paid by the Appellant to the bank for arriving at settlement with the bank regarding amount paid by the bank towards unit in question - The said payment shall be paid to the Appellant within period of 60 days from today. Conclusion - The Appellant was rightly classified as an unsecured financial creditor and directed the reimbursement of the amount paid to the bank, ensuring compliance with the resolution plan. Appeal disposed off.

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• 2025 (3) TMI 974
  Entitlement of dissenting financial creditor to receive their liquidation value upfront before any payments are made to the assenting financial creditors - true import and interpretation to Clause 21 of the resolution plan - HELD THAT:- Adjudicating Authority has rightly taken the view that approved resolution plan is binding on all stakeholders including assenting and dissenting and SRA also. The judgment of this Tribunal in Puro Natural Sugars JV [ 2023 (11) TMI 1034 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI ], which has been relied by the appellant has also been noticed and considered by the Adjudicating Authority. In the above case, appeals were filed challenging the Order of the Adjudicating Authority rejecting the resolution plan and the orders passed in the other connected IAs. The objection to the plan was raised by the dissenting financial creditors. The present is a case where Clause 21 of the plan itself contemplates mechanism of payment to the assenting financial creditor and dissenting financial creditor. Liquidation value of dissenting financial creditor is provided to be paid prior to any recovery are made by assenting financial creditor, hence there is no indication in the resolution plan that the dissenting financial creditor has to be paid as per instalment i.e., for period of 10 years. The decision by dissenting financial creditor not to approve the plan was on the premise that they were not agreeable to receive the 100% payment of their claim within 10 years period rather they were satisfied to receive only lesser amount i.e., 15% in case of IDBI as liquidation value before any payment is made to the assenting financial creditor. Judgment of this Tribunal in Puro Natural Sugars JV, does not come to the aid of the appellant in the facts of the present case where payment to dissenting financial creditor is clearly contemplated in Clause 21 of the resolution plan as noted above and considered by the Adjudicating Authority. Conclusion - The Adjudicating Authority has passed the impugned order after correctly interpreting Clause 21 of the resolution plan and no error has been committed by the Adjudicating Authority in directing for payment to the dissenting financial creditor prior to any recoveries are made by assenting financial creditor. Appeal dismissed.

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• 2025 (3) TMI 973
  Extension of timeline for the successful bidder to pay the balance sale consideration beyond the 90-day period prescribed by the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations 2016 - HELD THAT:- The Hon ble Supreme Court in V.S. Palanivel vs. P. Sriram, CS, Liquidator, Etc. [ 2024 (9) TMI 625 - SUPREME COURT ] itself had occasion to consider the power of the Adjudicating Authority in reference to extension of time for deposit of the balance consideration. The Hon ble Supreme Court held that the Adjudicating Authority exercised statutory powers under Section 35 read with Rule 11 of the NCLT Rules for extending the time. Thus, Hon ble Supreme Court itself did not find any fault in the order of the Adjudicating Authority extending the time of payment after expiry of time of payment prescribed. As noticed above, an application filed by successful bidder/ successful auction purchaser for extension of time was allowed by the Adjudicating Authority on 05.05.2020 which was challenged by the Appellant in Company Appeal (AT) (Ins.) No.343 of 2021 which came to be dismissed on 16.09.2022 - The law laid down by the Hon ble Supreme Court clearly comes to the aid of the successful bidder in the present case. Adjudicating Authority having extended the time for deposit of the amount which deposit was made and thereafter application was filed for approval of the sale which has also been granted by the Adjudicating Authority. Conclusion - While the provisions of Clause 12 of Schedule 1 are mandatory, the Adjudicating Authority has the discretion to extend the timeline for payment under certain circumstances, exercising its statutory and inherent powers. There are no ground to interfere with the impugned orders - appeal dismissed.

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• 2025 (3) TMI 972
  Termination of Corporate Insolvency Resolution Process (CIRP) initiated - seeking clarification of the order on the ground the order simply stops the IRP to take further steps in the Corporate Debtor but in no way it says the CIRP has come to an end or the order dated 04.12.2023 of the Ld. NCLT initiating the CIRP is quashed - HELD THAT:- Admittedly upon initiation of CIRP, the moratorium is to be declared which in fact was declared by the impugned order 04.12.2023. Admittedly vide such order, the IRP was appointed and admittedly per Section 17 of IBC, from the date of the appointment of the IRP, the management of the affairs of the Corporate Debtor stood vested with the IRP on 04.12.2023 itself - A bare perusal of the order dated 07.12.2023 passed by this Tribunal shows the Tribunal only granted a stay on further steps to be taken by the IRP. Admittedly the applicant being the majority shareholders of the Corporate Debtor and in the wake of allegations it makes; including admission by the appellant that some portion of property of Corporate Debtor has been mortgaged after the CIRP is initiated; the applicant needs to be heard and it cannot be said it has no locus. Even otherwise we need not dwell upon this issue as even the appellant s application is also for clarification of order dated 07.12.2023. The main issue in it was qua exclusion of some period for counting of the time limits for completion of CIRP, hence would not be relevant for the issue involved herein. The learned senior counsel also referred to Rajendra Bhutia Vs Suri Rahul Erstwhile Director of the Corporate Debtor and Another [ 2021 (10) TMI 1458 - NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH] wherein the facts were the RP did not take possession of the assets during a particular period and the Board of Directors of Corporate Debtor were incharge of its affairs and it was held there cannot be a vacuum in the management of company. However, in this case too the amount so withdrawn by the erstwhile Directors was directed to be refunded alongwith fine to the IRP, hence also is not relevant. Admittedly after 07.12.2023 the RP is precluded from taking steps qua inviting claims; constituting of Committee of Creditors etc. etc, but this would not mean the Suspended Board shall be incharge of assets of the Corporate Debtor. Conclusion - i) The management of the Corporate Debtor remains with the IRP despite the stay on further CIRP steps, as per the legal fiction created by the IBC. ii) The stay order does not imply a return to the status quo ante, and the Board of Directors cannot resume control. Application disposed off.

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• Service Tax

• 2025 (3) TMI 971
  Levy of service tax on GTA services under reverse charge mechanism - demand confirmed on the ground that no documents were furnished to substantiate the Appellant s claim - HELD THAT:- It is observed that the demand of service tax in this case has been confirmed solely on the basis of comparison of books of accounts with service tax returns, without analyzing the reasons for the difference. It is observed that during the underlying period, the books of accounts of the appellant record the expenses on accrual basis, whereas under reverse charge mechanism, the service tax is payable on payment basis. Hence, service tax cannot be calculated on the basis of the figures reported under the head Freight Charges . The Appellant furnished various certificates from Chartered Accountants to substantiate that in those specific cases, demand of service tax does not arise. It is observed that such certificates were provided by independent chartered accounts, after verification of books of accounts, for obtaining an independent and unbiased opinion regarding correctness of the demand of service tax thereon. In the impugned order, however, the ld. adjudicating authority, without commenting upon the correctness of such certificates, completely brushed them aside on the ground that such certifications ought to have been obtained only by such Chartered Accountants, who are Statutory Auditors of the Appellant, without providing any legal basis for such requirement. The reason given by the ld. adjudicating authority to reject the CA certificate not agreed upon. Also, the independent CA Certificates have been issued based on verification of books of accounts of the Appellant and they certify that the demand is not sustainable. Interest and penalty - HELD THAT:- Since the demand of service tax is not sustainable, the question of demanding interest and imposing penalty does not arise and accordingly, the same is set aside. Conclusion - The demand confirmed vide the impugned order solely based on comparison of books of accounts with service tax returns, without analyzing the reasons for the difference, is not sustainable. Appeal allowed.

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• 2025 (3) TMI 970
  Tax liability of the service provider providing Commercial and Industrial Construction Service to the public authorities - Period post 1st July, 2007 - applicability of section 66D, the negative list of services - HELD THAT:- The scope of the circular the definition, the exclusion clause of 65 (25 b) and that of mega-exemption notifications now stands clarified by Hon ble Supreme Court in the case of Krishi Upaj Mandi Samiti v. Commissioner of Central Excise and Service Tax [ 2022 (2) TMI 1113 - SUPREME COURT] Hon ble supreme court has dealt with the Circular No. 89/7/2006 as relied upon by the present appellant as well. It has been held that Paragraph 3 of the Circular, specifically clarifies that if such authority performs a service, which is not in the nature of a statutory activity and the same is undertaken for consideration, then in such cases, service tax would be leviable, if the activity undertaken falls within the ambit of a taxable service. Thus the circular exempts activities that are mandatory statutory obligations with fees deposited into the Government Treasury. Since the fees collected by APMCs were directed to the Market Committee Fund and not the Treasury, the exemption did not apply. The Court further noted that language used in circular of 2006 is clear and unambiguous. Applying the principles of interpretation of statutes, the Court observed that, It is settled law that the notification has to be read as a whole. If any of the conditions laid down in the notification is not fulfilled, the party is not entitled to the benefit of that notification. An exception and/or an exempting provision in a taxing statute should be construed strictly and it is not open to the court to ignore the conditions prescribed in the relevant policy and the exemption notifications issued in that regard - After carefully perusing the words used in S. 9, the Court stated that the activity cannot be said to be a mandatory statutory activity as contended by appellants since the fee collected is not deposited into the Government Treasury; it will go to the Market Committee Fund and will be used by the market committees. Thus such a fee collected cannot have the characteristics of the statutory levy/statutory fee. Thus, under the 1961 Act, it cannot be said to be a mandatory statutory obligation of the Market Committees to provide shop/land/platform on rent/lease. Conclusion - The functions of RIICO and RASMB are held to be discretionary functions for commercial purposes. Hence irrespective the roads or compound wall have been constructed for these local authorities, the appellant is liable to pay service tax while providing the said services. There is no exemption available to the appellant while providing such services to any private entity whose interest is nothing except commercial. There are no infirmity in the findings arrived at by the adjudicating authority below - appeal dismissed.

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• 2025 (3) TMI 969
  Taxability - declared service - amounts received in the nature of Liquidated damages, forfeiture of security deposits, fines/penalties/Earnest Money deposit, etc. as compensation for the losses incurred on account of delay on part of the contractors/vendors in completion of the work project etc., amounts to toleration of an act or not - HELD THAT:- In the case of South Eastern Coalfields [ 2020 (12) TMI 912 - CESTAT NEW DELHI ], the Principal Bench of this Tribunal after considering the provision of Section 65B(44) defining service , Section 66E(e) enumerating the declared services and the provisions of Section 67 dealing with the valuation of taxable service for charging service tax and referring to the decision of the Hon ble Apex Court in the case of Commissioner of Service Tax Vs. M/s. Bhayana Builders [ 2018 (2) TMI 1325 - SUPREME COURT ] and Union of India Vs. Intercontinental Consultants and Technocrats [ 2018 (3) TMI 357 - SUPREME COURT ] and the TRU Circular dated 20.06.2012, held as t is, therefore, not possible to sustain the view taken by the Principal Commissioner that penalty amount, forfeiture of earnest money deposit and liquidated damages have been received by the appellant towards consideration for tolerating an act leviable to service tax under section 66E(e) of the Finance Act. There is no reason to differ with the settled principles of law as enunciated by the decision in the case of South Eastern Coalfields Ltd. The amount recovered by the appellant towards penalty is not a consideration for any activity which has been undertaken by the appellant and as a result there is no service in terms of Section 65B(44) of the Act. The facts of the present case do not suggest that there is any other independent agreement to refrain or tolerate, or to do an act between the parties hence the issue is decided in favour of the appellant. The other issues related to invocation of extended period of limitation, penalty and interest are not required to be gone into as the issue on merits stands decided in favour of the appellant. The learned Counsel for the appellant has also submitted that in certain transactions, the amounts received in the nature of liquidated damages/forfeited amounts from the contractors located outside India, i.e., in Canada, Hong Kong, Singapore, etc there cannot be any service tax liability on the alleged service of tolerating the act of delay in the hands of the appellant - Since the issue is held in favour of the appellant on merits, it is not necessary to go into the said argument raised by the learned Counsel. The amount received from the recipients located abroad is hereby set aside. Conclusion - The amounts collected as penalties and liquidated damages do not constitute consideration for any service under the Finance Act, 1994. The impugned order deserves to be set aside. The appeal is, accordingly allowed.

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• 2025 (3) TMI 968
  Levy of service tax - Business Exhibition Services - business exhibitions conducted by the appellant - doctrine of mutuality - intellectual property service - income received by the appellant under a memorandum of understanding for conducting property - club or association services - membership fees and subscription fees collected by the appellant. Levy of service tax - Business Exhibition Services - business exhibitions conducted by the appellant - HELD THAT:- Though the exhibition conducted by the appellant is squarely falling under the category of service tax as confirmed by the adjudicating authority, since the participants for the exhibition were only the members and in the absence of any evidence regarding participation of any other person, it cannot be considered as exhibition as provided, and there is no service provided to anyone else in this regard. Regarding the contribution collected from the members since it is collected for the benefit of the members of the association, the decision in the case of State of West Bengal Vs. Calcutta club Ltd. [ 2019 (10) TMI 160 - SUPREME COURT] , squarely covers the issue and hence the demand is unsustainable. Levy of service tax - intellectual property service - income received by the appellant under a memorandum of understanding for conducting property - HELD THAT:- In the absence of any legally protected intellectual property, the agreement entered by the referred in the impugned order cannot be classified as falling under the category of intellectual property service as per section 65(55b) of the Finance Act, 1994. Levy of service tax - club or association services - membership fees and subscription fees collected by the appellant - HELD THAT:- The said demand is also unsustainable since the doctrine of mutuality continues to be applicable to incorporated and unincorporated members clubs even after the 46th Amendment adding Article 366(29A) to the Constitution of India as per the judgment of the Hon ble Supreme Court in the matter of State of West Bengal Vs. Calcutta club Ltd. [ 2019 (10) TMI 160 - SUPREME COURT] . Hence demand confirmed as per impugned order under club or association is also unsustainable. Penalty under section 78 of the Finance Act, 1994 - HELD THAT:- Since the demand as per the impugned order itself is held as unsustainable, the appeal filed by the department is dismissed. Conclusion - The demands for service tax under the categories of business exhibition service, intellectual property service, and club or association service are deemed unsustainable. The appeal filed by the Revenue regarding penalties is dismissed, as the underlying service tax demands are found to be unsustainable. Appeal dismissed.

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• 2025 (3) TMI 967
  Benefit of Exemption - applicability of serial no 19 of notification no. 25/2012 dated 20-06-2012 - appellant is providing Outdoor Catering Services within a hospital canteen - HELD THAT:- Admittedly, the appellant is running a canteen which is located in the Hospital and the said Hospital is having the facility of air-conditioning. The said canteen was an integral part of the hospital establishment, as in apparent from the agreement entered between the appellant and the hospital. The said mess was required for the purpose of providing meal and other eatables to the patients of the Hospital. This clause of the agreement makes it amply clear that the mess was an integral part of the hospital establishment only. A perusal of the notification makes it clear that such services are exempt only if no air conditioning or central hearing is provided. In the instant case, it is also noted that the learned counsel has submitted that the hospital was air-conditioned, and the mess being setup for in-patient services, would form a part of the hospital establishment only. The burden of proving the eligibility to an exemption notification rests on the taxpayer claiming the exemption. In the instant case, no positive evidence has been led by the learned counsel of the appellant that there was no air conditioning facility in the said mess. In fact, it has been submitted that hospital was air conditioned for the welfare to the patient especially the ICU patients. Consequently, the appellant does not qualify for the service tax exemption. Conclusion - The appellant s canteen, as part of an air-conditioned hospital, did not qualify for the service tax exemption under Serial No. 19 of N/N. 25/2012-ST. The appellant s failure to provide sufficient evidence to prove the absence of air-conditioning in the canteen led to the dismissal of the appeal. Appeal dismissed.

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• 2025 (3) TMI 966
  Recovery of service tax on account of differential value arising out of reconciliation of the Trial Balance and ST-3 Returns for the period 2010-11 and 2011-12 under proviso to Section 73(1) read with Section 73(2) of the Finance Act, 1994 - value shown in the invoices towards material cost are to be included for the payment of Service Tax or not - entitlement for exemption under Notification No. 12/2003 dated 01.07.2003 for the materials used in providing Repair and Maintenance Service for sea containers - Extended period of limitation. Value shown in the invoices towards material cost are to be included for the payment of Service Tax or not - HELD THAT:- This Tribunal had, after appreciation of the facts therein, which are similar to the facts of the present appeal, allowed the appeal in the appellants favour, in the case of M/S. BAY CONTAINER TERMINAL PVT. LTD. VERSUS CCE, ST, CHENNAI [ 2018 (4) TMI 1035 - CESTAT CHENNAI] where it was held that Hon ble Supreme Court in Jain Brothers [2012 (7) TMI 935 - SUPREME COURT], state that the cost of goods supplied during repair cannot be added to the value of the taxable service in view of the said exemption . Subsequently also, the appellants had preferred Service Tax Appeal No.40992/2013 being aggrieved by OIO No.02/ST/COMMR/2013 dated 15.03.2013 passed by the Commissioner of Central Excise, Tirunelveli confirming the demand of service tax made on the allegation of non-addition of the cost incurred by the appellant for replacement/repairs undertaken by them of damaged parts of the containers used in international transportation, in the taxable value - This appeal too was decided in the appellants favour by placing reliance upon M/S. BAY CONTAINER TERMINAL PVT. LTD., VERSUS THE COMMISSIONER OF G.S.T. CENTRAL EXCISE [ 2019 (3) TMI 2081 - CESTAT CHENNAI] . Service tax demand on the basis of reconciliation of the Trial Balance and ST-3 returns - HELD THAT:- The Adjudicating Authority has not furnished any reason for non-acceptance of the appellant s reconciliation statement as well as the certificate of the Chartered Accountant that the appellant has relied upon and adduced as evidence for discharge of its tax liabilities with respect to the bills issued from Mumbai office apart from stating that the appellant has not produced evidence to substantiate their claim. The Adjudicating Authority has not recorded any categorical finding as to what exactly are the documents which he desired to see for his satisfaction - the non acceptance of CA certificate and reconciliation statement incorrect, when the demand was only premised on difference noticed during audit upon comparison of their trial balance with the ST-3 returns and that too on material cost, which in any event ought to be excluded in terms of the notification benefit claimed by the appellant - the non-acceptance of the CA Certificate without stating any reason for rejection or controverting it in any manner, is incorrect and untenable and the benefit thereof ought to be extended to the appellants. Extended period of limitation - HELD THAT:- The allegations of mala fides are often more easily made than proved, and the very seriousness of such allegations demand proof of a high order of credibility. In such circumstances, the Department could not have invoked the extended period of limitation and the Appellants succeed in their appeal on this count also. Entitlement to the benefit of the notification 12/2003 ibid - HELD THAT:- The appellant was entitled to the exemption under Notification No. 12/2003, as the invoices provided sufficient documentary proof of the materials used in the repair services. Conclusion - i) The appellant was entitled to the exemption under Notification No. 12/2003, as the invoices provided sufficient documentary proof of the materials used in the repair services. ii) The demand for service tax based on reconciliation discrepancies was unjustified, as the appellant had provided sufficient evidence of tax payment at the Mumbai branch. iii) The extended period of limitation was not applicable, as there was no evidence of wilful suppression or misstatement by the appellant. The penalties imposed under Section 78 of the Finance Act, 1994 were also found to be unjustified. Appeal allowed.

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• 2025 (3) TMI 965
  Levy of service tax under RCM on the remuneration (salary, commission and perquisites) paid to the promoter (whole-time director/ whole time directors) - non-payment of service tax, considering the services rendered by them to appellant to be in relation to employment - HELD THAT:- The department is not disputing that the Income Tax has been paid on such remuneration/commission under Income Tax Act as salary on the grounds that both the Acts are different and any treatment of an amount under Income Tax Act or Provident Fund has no bearing on leviability of service tax under the Finance Act, 1994. In an identical situation, the issue as to whether the service tax can be levied on Vice Chairman/Chairman cum Managing Director, who also happened to be shareholder/promoter, this Bench has dealt with the issue in the case of Amara Raja Batteries [ 2024 (6) TMI 1331 - CESTAT HYDERABAD] . The Adjudicating Authority has mainly contested that there is no employer and employee relationship between the company and whole time director/promoter. Apparently, the Adjudicating Authority has felt that in the absence of any contract or agreement between the Managing Director and the Company to hire or fire, the consideration paid cannot be treated as salary and that it is a settled legal position that the payment of Income Tax and Provident Fund does not absolve the charge of service tax. The issue of leviability of service tax on Chairman/ Vice Chairman cum Managing Director/ whole time executive directors receiving salary and perks, has been extensively dealt with by this Bench in the case of Amara Raja Batteries. In addition, various other case laws relied upon by the appellant are also relevant to come to the conclusion that the Managing Director/whole time director, even if they are promoter, are nothing but employees of the Company, as they are engaged in key managerial functions and running day to day affairs of the company as against the independent directors or non-executive directors, who are engaged in providing advisory services. The appellants have clearly discharged their service tax liability in respect of independent directors/ non-executive directors. It is also not in dispute that the Income Tax has been paid by treating this amount as salary income and even Provident Fund has been deducted accordingly. Conclusion - Remuneration paid to whole-time directors, when treated as salary and subject to income tax and Provident Fund deductions, is not liable to service tax. Appeal allowed.

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• Central Excise

• 2025 (3) TMI 964
  Condonation of inordinate delay of 546 days in filing the appeal - sufficient cause for delay or not - HELD THAT:- It is not in dispute that the appellant s appeal before the CESTAT was dismissed on merits on 27-7-2016 and it is also not in dispute that appeal under Section 35G of the Act of 1944 was preferred by the appellant only on 23-6-2018, whereas the appeal has to be preferred within 180 days from the date of communication of the order to the aggrieved party. As such, it is filed with an inordinate delay in filing the appeal i.e. 546 days and the reason assigned in the application is only and only that Tax Case No.59/2011 was pending before this Court in which the question of law involved in this appeal is also required to be adjudicated and once it has been adjudicated by this Court in Tax Case No. 59/2011 on 13-9-2017, the appeal came to be filed. In this regard, the legal position pertaining to the question whether while considering the plea for condonation of delay, the Court can look into the merits of the matter, is well settled and recently it has been held so by their Lordships of the Supreme Court in the matter of H. Guruswamy and others v. A. Krishnaiah since deceased by LRs [ 2025 (1) TMI 1524 - SUPREME COURT] in which it has been held that while considering the plea for condonation of delay, the court must not start with the merits of the main matter, and observed as While considering the plea for condonation of delay, the court must not start with the merits of the main matter. The court owes a duty to first ascertain the bona fides of the explanation offered by the party seeking condonation. It is only if the sufficient cause assigned by the litigant and the opposition of the other side is equally balanced that the court may bring into aid the merits of the matter for the purpose of condoning the delay. The appellant was required to prefer appeal immediately after the impugned order dated 27-7-2016 was communicated to him. Even after the judgment in Tax Case No. 59/2011 was passed on 13-9-2017, he took more than nine months time to file appeal. Therefore, no cause much less sufficient cause has been shown for delay in filing the appeal. Conclusion - The appellant has shown sufficient cause for condoning the delay of 546 days in filing the appeal, the delay cannot be condoned. Appeal dismissed.

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• 2025 (3) TMI 963
  Dismissal of appeal on the ground of being time barred - HELD THAT:- A careful perusal of Section 35 (1) of the Central Excise Act would show that the Central Excise Officer is required to communicate the order to the person aggrieved for the purpose of providing a remedy to the person adversely affected by the order and thereby limitation would commence from the date of communication. However, the word communication used in Section 35 (1) has not been defined in the Central Excise Act or the rules made thereunder, therefore, the same deserves to be interpreted by applying the rule of contextual interpretation and keeping in view the language of the relevant provisions. In the matter of Kubic Darusz v. Union of India and others [ 1990 (1) TMI 78 - SUPREME COURT ], their Lordships of the Supreme Court while dealing with communication of grounds of detention under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA Act), held that communicate is a strong word. It requires that sufficient knowledge of the basic facts constituting the grounds should be imparted effectively and fully to the detenu in writing in a language which he understands, so as to enable him to make a purposeful and effective representation. A careful perusal of Section 37C (1) of the Central Excise Act would show that any decision or order passed or any summons or notice issued under this Act or the rules made thereunder, shall be served, also by speed post with proof of delivery to the person for whom it is intended or his authorised agent, if any; if the decision, order, summons or notice cannot be served in the manner provided in clause (a), by affixing a copy thereof, to some conspicuous part of the factory or warehouse or other place of business or usual place of residence of the person for whom such decision, order, summons or notice, as the case may be, is intended; and if the decision, order, summons or notice cannot be served in the manner provided in clauses (a) and (b), by affixing a copy thereof on the notice board of the officer or authority who or which passed such decision or order or issued such summons or notice. Sub-section (2) of Section 37C provides that every decision or order passed or any summons or notice issued under this Act or the rules made thereunder, shall be deemed to have been served on the date on which the decision, order, summons or notice is tendered or delivered by post. Section 37C of the Central Excise Act, which provides the manner of serving the copy of decision or order, it is quite vivid that the purpose of communicating the order to the person aggrieved, in this case, the appellant herein / assessee, is for the purpose of enabling him to prefer an appeal against the adjudicating order before the Commissioner (Appeals), as only 60 days time has been provided from the date of communication to prefer appeal and the Commissioner (Appeals) is empowered only to condone the delay of further 30 days and thereby, after 90 days from the date of communication, no further jurisdiction has been conferred to the Commissioner (Appeals) to condone the delay. There is complete exclusion of Section 5 of the Limitation Act as held by the Supreme Court in Singh Enterprises [ 2007 (12) TMI 11 - SUPREME COURT ]. As per showing of the appellant, once he is communicated with the copy of adjudication order by e-mail on 27-7-2018, he would be justified in preferring appeal on 25-9-2018 before the Commissioner (Appeals), which is within the period of limitation of 60 days from the date of communication of the order, as the appellant was actually communicated with the order on 27-7-2018. As such, the Commissioner (Appeals) has committed grave legal error in holding the appeal to be barred by limitation and that it has been filed beyond the period of 60 days from the date of communication of the order. The CESTAT has also committed legal error in perpetuating the illegality committed by the Commissioner (Appeals) by dismissing the appeal holding it to be barred by limitation by affirming the order passed by the Commissioner (Appeals). Conclusion - The limitation period for filing an appeal under Section 35(1) of the Central Excise Act begins from the actual or constructive communication of the order to the aggrieved party. The requirement for proof of delivery under Section 37C is essential for establishing the commencement of the limitation period. The substantial question of law is answered in favour of the assessee and against the Revenue. The matter is remitted to the Commissioner (Appeals) for adjudicating the appeal on its own merit in accordance with law, expeditiously, as the appeal is old one and required to be decided expeditiously.

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• 2025 (3) TMI 962
  Levy of Excise duty - sale of Ziking (slag), a by-product of the manufacture of Silico Manganese - clearance of Ziking has been ascertained on the basis of documents available in the laptop and pendrive recovered from Shri Mahesh Paswan - admissible evidence or not - alleged shortage of stock of Silico Manganese - it is the contention of the appellants that the stock taking was done on eye estimation basis - Penalty. Levy of Excise duty - sale of Ziking (slag), a by-product of the manufacture of Silico Manganese - HELD THAT:- In this case, the fact which is not in dispute is that this Ziking (slag) emerges during the course of manufacture of the final product, which may be a low grade Silico Manganese. However, it is a fact on record that Ziking (slag) is a by-product and not the final product manufactured by the appellant. In these circumstances, reliance placed on Monnet Ispat and Energy Ltd. [ 2016 (8) TMI 543 - CESTAT NEW DELHI] where it was held that It is an admitted fact that Silico Manganese slag and Ferro Chrome slag emerge involuntarily during the course of manufacture of the final product. Since, the appellant had no intention to manufacture slag, the same, in my opinion, should not be considered as excisable goods. Since the slag seized to the excisable goods, the question of dutibility or exemption does not arise. Therefore, the embargo created in Rule 6(3) of the Cenvat Credit Rules, 2004 for payment of amount equal to 5%, 6% or 10% of the value of exempted goods has no application in the circumstances of the present case. It is found that the issue as to whether a by-product is liable to duty has been examined by the Tribunal at Bangalore in the case of Haryana Steel and Power [ 2015 (11) TMI 771 - CESTAT BANGALORE] wherein it was held amendment in Section 2(d) will not change the scenario inasmuch as the manufacture of waste, refuse, scrap, etc., cannot be considered to be manufactured items in terms of Section 2(f) of the Central Excise Act. Since Ziking (slag) is a by-product which emerges during the course of manufacture of the final product, the same is not liable to duty - Further, the said clearance of Ziking has been ascertained on the basis of documents available in the laptop and pendrive recovered from Shri Mahesh Paswan, which are not admissible as evidence, on the basis of which substantial demand has also been dropped by the ld. adjudicating authority - demand not sustainable. Alleged shortage of stock of Silico Manganese - HELD THAT:- It is found that for such a huge quantity, not much time was spent during physical verification of the stock and stock taking was done only on eye estimation basis. Merely on eye estimates, shortage of stock cannot be alleged. In view of this, on the said shortage, the demand of duty is not sustainable against the appellants - the impugned order qua confirmation of demands of duty of Rs.23, 52, 292/- on sale of Ziking (slag) and Rs.6, 42, 584/- on account of alleged shortage of goods set aside. Penalty - HELD THAT:- As no demand is sustainable against the appellant, no penalty is imposable on the appellants. Conclusion - i) Since Ziking (slag) is a by-product which emerges during the course of manufacture of the final product, the same is not liable to duty. ii) Merely on eye estimates, shortage of stock cannot be alleged. iii) As no demand is sustainable against the appellant, no penalty is imposable on the appellants. Appeal allowed.

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• 2025 (3) TMI 961
  Prayer to remand the issue to be heard on merits by the Lower Appellate Authority - Valid service of notice or not - non-intimating the vacation of the registered premises to the department - HELD THAT:- The Appellant has only pleaded to remand the matter to the lower appellate authority for deciding the case on merits. The Ld. Counsel has relied upon the decision of the Hon ble Supreme Court in the case of Saral Wire Craft Pvt. Ltd. Vs. Commissioner of Customs, Central Excise and Service Tax and Others [ 2015 (7) TMI 894 - SUPREME COURT] wherein it was held that the order served on an unauthorized person has inevitably led to miscarriage of justice and the specific language of Section 37C(a) of the Act requires that an order must be tendered on the concerned person or his authorized agent, in other words, on no other person to ensure efficaciousness. In the present case, the Order-in-Original No. 23/2016 (AC) dated 15.11.2016 passed by the Assistant Commissioner of Customs, Central Excise and Service Tax, Salem against which the party has belatedly filed the appeal and which was sent to the earlier leased factory was received by the appellant only on 26.10.2017 and the appellant has filed the above appeal without any further loss of time on 17.11.2017. As such, the appeal has been filed in time as there is no compliance with the provisions of Section 37C of the Act and as there is evidence that the copy of the order was served on some other person or servant working in erstwhile company wherein the name was not even mentioned cannot be treated as service of the order. Considering that the Appellant had vacated the premises before the issuance of the Order-in-Original dated 15.11.2016, it is considered appropriate to direct the lower authority to decide the Appellants appeal on merits. The order to be passed shall be a reasoned order dealing with all submissions of Appellant in strict compliance of the principles of natural justice. It is clarified that this order would not absolve the petitioner from its liability to pay taxes, if any. Conclusion - The service of the Order-in-Original is invalid, and the appeal was not time-barred. The matter is remanded to the lower appellate authority to be decided on merits, ensuring compliance with principles of natural justice. The prayer of the Appellant to remand the issue to be heard on merits by the Lower Appellate Authority is allowed.

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• 2025 (3) TMI 960
  Extension of benefit of exemption N/N. 67/1995-CE dated 16.03.1995 as amended for captive consumption of molasses used in manufacture of Ethyl Alcohol/ Rectified spirit - HELD THAT:- The issue is no longer res integra. Hon ble Supreme Court in the matter of Dharani Sugars Chemicals Ltd. [ 2022 (3) TMI 274 - SC ORDER ] and Tribunal in appellant s own case vide Final order No. 20879 20886/2023 dated 25.08.2023 [ 2023 (8) TMI 1318 - CESTAT BANGALORE ] has set aside the demand, holding that rectified spirit which is not used for human consumption is nothing but ethyl alcohol and is finding place in tariff item No. 2207 20 00. Conclusion - Ethyl Alcohol and Rectified Spirit are excisable goods under Tariff Item No. 2207 20 00, and the exemption notification applies accordingly. Appeal allowed.

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• 2025 (3) TMI 959
  Levy of Central Excise Duty on the subsidy received from the Government of India in relation to sale of their product Urea, which is being sold as per the regulated price declared by the Government of India - HELD THAT:- The issue regarding leviability of Central Excise Duty on subsidy amount given by the Government to the fertiliser company is clearly explained by the Board vide Circular No.983/7/2014-CX, wherein, inter alia, it was clarified that in respect of fertiliser for which subsidy is provided by the Government, Excise Duty will be chargeable on the MRP and not on the subsidy component provided by the Government. It is also noted that this clarification was issued in view of department issuing SCNs relying on the judgment of Hon ble Supreme Court in the case of CCE, Mumbai Vs Fiat India Pvt. Ltd. [ 2012 (8) TMI 791 - SUPREME COURT ]. In the SCN, the Adjudicating Authority also relied on the same judgment for drawing her conclusion that subsidy is in the nature of additional consideration, therefore, liable to Central Excise Duty. Therefore, it is obvious that the Government has clarified the leviability of Central Excise Duty in respect of subsidy provided by the Government to the fertiliser company. Even a plain reading of the statutory provisions of section 4 would indicate that when price is not the sole consideration, recourse can be taken to Valuation Rules i.e., Rule 6, to add the additional consideration. However, this additional consideration must flow from the buyer to the seller either directly or indirectly. In this case, Government of India is not the buyer and therefore, the subsidy given by the Government of India cannot be considered as additional consideration flowing from buyer to the seller directly or indirectly. Therefore, the subsidy is not leviable to Central Excise Duty. Conclusion - i) Subsidies provided by the Government for fertilizers, as per policy measures, do not constitute additional consideration for the purpose of excise duty valuation. ii) The transaction value should not include amounts not received from the buyer or on behalf of the buyer. Appeal allowed.

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• 2025 (3) TMI 958
  Calculation of Central Excise Duty - inclusion of freight charges in the transaction value for charging Central Excise Duty - suppression of facts or not - levy of penalty. Inclusion of freight charges in the transaction value for charging Central Excise Duty - HELD THAT:- There is some ambiguity as regards nature of Purchase Orders (P.O.) which throw some light whether the sale was meant for ex-works or it was on FOR basis. It is obvious that in view of the judgments cited by the learned AR in the case of sale on FOR basis, both the judgments, Roofit Industries [ 2015 (4) TMI 857 - SUPREME COURT ] and Ispat Industries Ltd [ 2015 (10) TMI 613 - SUPREME COURT ], held that such amounts are required to be added to the assessable value. However, if the sale was ex-works then relying on the judgment of Ispat Industries Ltd, the same would not be included. It is a matter of fact, which has not been brought out clearly in the impugned order and therefore, it needs to be remanded back to the Original Adjudicating Authority, who shall examine all the relevant documents to be provided by the appellant to come to the conclusion whether sale is exworks or ex-factory and thereafter, based on the other observations in the earlier para, decide whether the amounts of freight and insurance can be added to the transaction value or otherwise. Since both types of sale could be there, he would have to redetermine the demand amount. Imposition of penalty under Rule 25(1) of Central Excise Rules read with section 11AC(c) of the Central Excise Act - element of fraud or collusion or any wilful misstatement or suppression of facts exists or not - HELD THAT:- There is no positive evidence on record suggesting that the appellants have deliberately chose not to pay Excise Duty on freight charges and suppressed any information with intent to evade the payment of duty. Therefore, the penalty invoked in terms of section 11AC(c) of the Act is not sustainable. Conclusion - i) The matter required further factual determination and the case remanded for re-examination by the Original Adjudicating Authority. ii) Penalty invoked in terms of section 11AC(c) of the Act is not sustainable. Appeal allowed by way of remand.

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• 2025 (3) TMI 957
  Benefit of the Small Scale Industry (SSI) exemption under N/N. 8/2003-CE - applicability of amendment to Notification No.8/2003- CE dated 01.03.2003 vide Notification No.47/200-CE dated 01.09.2008 - extended period of limitation - HELD THAT:- As per the SSI Notification as amended, packing materials namely printed cartons of paper or paper board, metal containers, high density polyethylene woven sacks, adhesive tapes, stickers, pilfer proof caps, crown corks, metal labels, bearing brand name/trade name of another are exempted. Since the Adjudication authority has held that the goods manufactured by the Appellant are falling under the above category, there is no reason or justification to deny the very same benefit as per the Notification No. 24/2009-CE(NT) dated 21.10.2009, for the period from 01.04.2006 to 31.08.2008. There is a strong force in the contention raised by the Appellant that the Adjudication authority has invoked the extended period of limitation without considering the facts and circumstances in the present matter. There is no allegation of suppression of facts and demand was confirmed only on the ground that appellant has not paid excise duty for the relevant period. Moreover, longer period cannot be invoked when issue involved is interpretation of the complex provision of law as held in the matter of M/s NRC Ltd Vs. CCE, Thane-I [ 2006 (12) TMI 12 - CESTAT, MUMBAI ]. Further the Hon ble Supreme Court in the matter of M/s Cosmic Dye Chemicals Vs. CCE, Mumbai [ 1994 (9) TMI 86 - SUPREME COURT ] held that intention to evade duty must be proved for invoking the proviso to Section 11A for extended period of limitation. Conclusion - i) The appellant s goods, specifically packing materials, were eligible for SSI exemption under the amended Notification No. 8/2003-CE. This exemption applied for the entire period in question, from April 2006 to August 2009, as clarified by subsequent notifications. ii) The extended period of limitation could not be applied without evidence of intentional evasion of duty. The entire demand is unsustainable on merit as well as on limitation - Appeal allowed.

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• 2025 (3) TMI 956
  Process amounting to manufacture or not - activities undertaken at the Central warehouse, where the activity of packing, re-packing and labelling was carried out by the appellant - demand of excise duty on re-packed spare parts on the ground that these goods were parts of motor vehicles (automobiles) and these parts were covered under Sl. No.100 of the Third Schedule to the Central Excise Tariff Act, 1985 - HELD THAT:- The issue involved in this appeal was decided by the Larger Bench of the Tribunal in M/s. Action Construction Equipment Ltd, Shri P.K. Bansal, Shri Vijay Agarwal, Commissioner of Central Excise, M/s. JCB India Ltd., Tata Hitachi Construction Machinery Co. [ 2023 (6) TMI 1320 - CESTAT MUMBAI (LB) ]. The present appeal is also covered by such order of the Larger Bench. On careful reading of the decision given by the Larger Bench of the Tribunal on the disputed issues, it is found that the amendment carried out w.e.f. 29.04.2010 makes it abundantly clear that a legislature did not intend to tax the parts, components and assemblies of earthmoving equipment etc. under the Head Automobiles ; therefore, to this extent, the adjudged demands for the period prior to 29.04.2010 cannot be sustained. Further, it is noted that the respondents-assessee have paid Central Excise duty for the period post 29.04.2010, and such duties paid have also been appropriated by the Department vide Order-in-Original dated 13.07.2012. Thus, there is no dispute in this regard for the period post 29.04.2010, which is required to be examined in this case. Moreover, Larger Bench has deliberated on the issue whether the earthmoving equipment etc. can be considered as automobiles in the case of respondent-JCB India Ltd. itself. In finally answering the issues on which reference was made to Larger Bench, on account of difference of opinion between two Co-ordinate Benches of the Tribunal and based on the direction given by the Hon ble Supreme Court, it was held The amendment made in the Third Schedule to the Central Excise Tariff Act by Finance Act, 2011 w.e.f. 29.04.2010 by adding serial no. 100A to the Third Schedule is prospective in nature. Thus, on the basis of the decision given by the Larger Bench, it is concluded that the adjudged demands for the period October, 2006 to 28.04.2010 is not sustainable. Conclusion - i) The term automobile should be interpreted based on common parlance and dictionary definitions rather than definitions from other statutes. ii) The activities undertaken by the appellant did not amount to manufacture for the relevant period, and the classification of the parts as automobiles was not applicable. Therefore, the excise duty demands were not legally sustainable. Appeal allowed.

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• 2025 (3) TMI 955
  Appropriate valuation method for the clearance of excisable goods by the appellant - inter-connected undertaking - applicability of Rule 8 9 of the Central Excise Valuation (Determination of price of Excisable Goods) Rules, 2000 or under Rule 10 ibid? - HELD THAT:- Section 40A of the Income Tax Act, 1961 deals with Expenses or payments not deductible in certain circumstances . This sub-section (1) to Section 40 ibid provides the powers for the Assessing officer of income-tax, when he determines that any expenditure is excessive or unreasonable and beyond the legitimate needs of the business or profession of the assessee, then he may disallow such deduction. The name of the persons on whom such expenditure had been incurred need to be mentioned at sub-section 40A(2)(b) ibid. There is no provision under which mentioning the names of a legal person(s) under the Income Tax Act, would enable such persons to be automatically treated as related person under the Central Excise law. In the absence of specific determination of the relationship between the appellant and the inter-connected undertaking, being related to each other in terms of Section 4(3) of the Central Excise Act, 1944, there are no merits in the impugned order insofar as it has treated the transaction between these two, as related party transaction without following the due process of law laid down under Central Excise statute. Therefore, there do not exist sufficient grounds to claim that the valuation of impugned goods shall be done on the basis of Rule 8 9 ibid, as held in the impugned orders. The interconnected undertakings are also related person. However, as per Rule 9 of Central Excise Valuation Rules, 2000, it is clear that Rule 9 ibid shall apply only when the goods are sold through person as specified under sub-clause (ii), (iii) or (iv) of clause (b) of Section 4 of the Act. Further, proviso of Rule 9 also suggests that merely because buyer is interconnected undertaking that alone is not sufficient for holding as related person. It is nowhere discussed in the impugned order or any evidence produced by the authorities below to state that the appellant and their interconnected undertaking are related in terms of the above provisions of the Central Excise statute. Therefore, on this ground alone the impugned order is liable to be set aside and it does not stand the scrutiny of law. In the case of Gajra Gears Private Limited [ 2015 (2) TMI 1090 - CESTAT NEW DELHI] , the Co-ordinate Bench of the Tribunal has held that valuation of goods between inter-connected undertaking shall be determined as prescribed under Rule 10. It is further found that in the case of Commissioner of Central Excise, Nagpur Vs. Ramsons Casting Private Limited [ 2016 (12) TMI 908 - CESTAT MUMBAI] , the Co-ordinate Bench of the Tribunal has held that in the absence of evidence, even if two companies are operated as interconnected undertakings , they cannot be treated as related person for valuation purpose and the transaction value cannot be rejected. Conclusion - The valuation should be conducted under Rule 10, not Rule 8 9, as the appellant and M/s Ujjawal Ispat Private Limited were not related persons under the relevant legal framework. The impugned order is set aside and the appeal is allowed.

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• 2025 (3) TMI 954
  Non-reversal of CENVAT Credit on Furnace Oil used in the manufacture of both dutiable as well as exempted goods - invocation of extended period of limitation - suppression of facts or not - HELD THAT:- With regard to applicability of the provisions of Rule 57CC ibid and Rule 6 of the Rules of 2001/2002/2004, it is found that the issue was highly contentious and there were divergent views expressed by the different judicial forums. Finally, the dispute was resolved by the Hon ble Supreme Court in the case of Gujarat Narmada Valley Fertilizers Co. Ltd. [ 2019 (12) TMI 430 - SUPREME COURT] where it was held that What is clear is that the exception to sub-rule (1) which is contained in sub-rule (2) itself contains an exception, namely, inputs intended to be used as fuel. This being the case, the moment it is found that inputs are intended to be used as fuel, such inputs go outside the ken of sub-rule (2) of Rule 6. When this happens, the exception contained in sub-rule (2) does not come into effect at all as a result of which sub-rule (1) must be applied on its own terms. On careful reading of the said relied upon judgment, it is found that the Hon ble Supreme Court have distinguished the contents in both the Rules i.e. sub-rule (1) and sub-rule (2) of Rule 6 ibid. Since sub-rule (2) of Rule 6 ibid has not dealt with the input i.e., fuel , in order to maintain separate records by the assessee, it was held that as per the provisions of sub-rule (1) of Rule 6 ibid, the assessee is required to reverse the CENVAT Credit availed on fuel used in or in relation to manufacture of the exempted goods. It is an admitted fact on record that the appellants had reversed the CENVAT Credit on pro-rata basis in respect of the Furnace Oil used for manufacture of the exempted final product. The appellants have contended that non-reversal of CENVAT Credit, involving the extended period of limitation, was owing to the reason that there was no element of suppression of facts, mis-statement etc., with intent to evade the government revenue. In this context, learned Advocate appearing submitted that with regard to Rule 57CC ibid and Rule 6 ibid, the issues were highly contentious and there were divergent views expressed by different judicial forums. Thus, he contended that the charges of suppression, mis-statement etc., cannot be levelled against the appellants, justifying invocation of extended period of limitation, prescribed under Rule 57(1) ibid and Rule 14 ibid, read with Section 11A of the Central Excise Act, 1944 - The submissions made by the learned Advocate for the appellants agreed upon, that the charges of suppression, mis-statement etc., cannot be fastened on the appellants inasmuch as they had maintained proper records to demonstrate the actual quantity of Furnace Oil used in the manufacture of the exempted goods and the said particulars were also furnished by them before the jurisdictional Central Excise authorities under the cover of their letter dated 05.05.2000. The demand, if any, should be calculated with respect to the normal period prescribed under Section 11A ibid. Since the appellants had averred that in the letter dated 24.08.2012, they had intimated the jurisdictional Central Excise authorities regarding reversal of MODVAT/ CENVAT Credit availed by them, the matter should be remanded to the original authority for the limited purpose of verification of records to ascertain the accuracy of the submissions made by the appellants regarding reversal of MODVAT/CENVAT Credit by them. Conclusion - The appellants had sufficiently reversed the CENVAT Credit on a pro-rata basis and maintained proper records. Matter remanded to the original authority for the limited purpose of verification of records to ascertain the accuracy of the submissions made by the appellants regarding reversal of MODVAT/CENVAT Credit by them. Appeal disposed off by way of remand.

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• 2025 (3) TMI 953
  Calculation of Exicse duty - inclusion of freight and insurance charges in the assessable value for the purpose of determining central excise duty when the sale is conducted on a FOR basis (Free on Road/Free at Destination) - HELD THAT:- It is an admitted fact that appellants were showing, ex-works price and freight and insurance charges separately on their invoices. However, it is also an admitted fact that as per purchase order, the delivery was free at destination . Therefore, even though they might be recovering these freight and insurance charges separately by way of reimbursement at a later date, it would not affect the terms of the purchase order which is apparent from plain reading of the purchase order. Further, merely because they have paid the VAT on ex-works value that in itself cannot become the basis for payment of central excise duty on the ex-works value. Therefore, in this case, as apparent from the terms and conditions and various submissions made, sale is on FOR basis. Much emphasis has been laid on the judgment of Hon ble Supreme Court in the case of Ispat Industries [ 2015 (10) TMI 613 - SUPREME COURT ]. It is found that, in this case, the Hon ble Court was dealing with a situation where the sale was ex-works and the issue was not concerning to FOR sale. Therefore, that case is distinguished on facts. Conclusion - In FOR sales, the buyer s premises could be considered the place of removal, necessitating the inclusion of freight and insurance charges in the assessable value for excise duty purposes. Appeal dismissed.

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• CST, VAT & Sales Tax

• 2025 (3) TMI 952
  Legality, validity and correctness of notification No.F-10/101/2006/CT/V/(94) dated 31-10-2006 (Annexure P-2) issued by the State of Chhattisgarh in exercise of the powers conferred by Section 15-B 72(i)(b) of the Chhattisgarh Value Added Tax Act, 2005 read with sub-section (5) of Section 8 of the Central Sales Tax Act, 1956 (CST Act) incorporating the amended provisions of Section 8 (5) of the CST Act - HELD THAT:- It is not in dispute that pursuant to the notification dated 3-6-1993, the petitioner Company was granted exemption as the petitioner Company is said to have invested more than Rs. 1, 000 crores in Integrated Steel Plant and the benefit of exemption started from 22-9-1996, thereafter on 10-5-2002, Section 8 (5) of the CST Act was amended making fulfillment of Section 8 (4) of the CST Act (production of C-Form) mandatory for availing the benefit of exemption under Section 8 (5) and pursuant to the notification dated 10-5-2002 making production of C-Form mandatory, the State Government issued notification dated 31-10-2006 in exercise of the powers conferred by Section 15-B 72(i)(b) of the Chhattisgarh VAT Act read with sub-section (5) of Section 8 of the CST Act incorporating the amended provisions of Section 8 (5) of the CST Act by which filing / production of C-Form has been made mandatory for availing the benefit of exemption under Section 8 (5) of the CST Act which the petitioner Company has called in question in the instant writ petitions. However, in this regard, decision of the Bombay High Court in Prism Cement Limited [ 2013 (7) TMI 668 - BOMBAY HIGH COURT ] was assailed before the Supreme Court by the State of Maharashtra in Prism Cement Limited s case [ 2025 (2) TMI 475 - SUPREME COURT ] in which their Lordships have considered the issue with respect to Section 8 (5) of the CST Act clarifying the legal position and held that such restrictions are prospective in nature and would not apply retrospectively to cases where absolute exemption was permitted much prior to the amendment. Reverting to the facts of the case in light of the aforesaid decision of the Supreme Court, it is quite vivid that the petitioner Company has been granted absolute exemption from the tax liability on fulfillment of certain conditions as per the notification dated 3-6-1993 and as per the decision of the Supreme Court, the amendment made in Section 8 (5) of the CST Act making the production of C-Form mandatory for availing benefit of tax exemption wold apply with effect from 10-5-2002 and the amended provision of Section 8 (5) with effect from 10-5-2002 would apply prospectively to the transactions in respect of which Eligibility Certificate are issued subsequently, as held by their Lordships of the Supreme Court. It is made clear that notification dated 31-10-2006 would not apply to the petitioner Company as they had already been exempted with effect from 22-9-1996, as the exemption was available up to 21-9-2019 and now, on coming into force of the GST regime up to 30-6-2017. In that view of the matter, notification dated 31-10-2006, would not apply to the petitioner Company and exemption would be available as per the notification dated 3-6-1993 up to 30-6-2017. Conclusion - The absolute power initially conferred under Section 8 (5) upon the State Government to grant exemption/partial exemption of tax in connection with inter-State sale, trade or commerce with the amendment was circumscribed and restricted to the fulfilment of the requirement of Section 8 (4) of the CST Act which prescribes for the submission of Form C and D only w.e.f. 11.05.2002. However, such restrictions are prospective in nature and would not apply retrospectively to cases where absolute exemption was permitted much prior to the amendment. Petition allowed.

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• 2025 (3) TMI 951
  Challenge to provisional attachment order - property was not owned by the main borrower but by a third-party guarantor - challenge to conditional share certificate - HELD THAT:- From the sale deed, it will be evident from page No. 57 that the property in question is the same property which is shown as property No. 3 in the auction notice. It is also evident that the purchaser is one Sangitaben Hareshkumar Mashru. It is also a matter of record which is undisputed by the parties that the said purchaser namely Sangitaben Hareshkumar Mashru was not a partner of M/s. Rameshwar Cotton Industries. In fact, the public auction notice at Page 46A of the paper book categorically refers to Name of Title holder of property No. 3 to be Sangitaben Hareshkumar Mashru and not M/s. Rameshwar Cotton Industries, which is only shown as title holder of property No. 1. Therefore, the aforesaid property being property No. 3 in the auction notice has been wrongly attached as a property of M/s. Rameshwar Cotton Industries or any of its partners, whereas, in reality it was a self own property, a third party guarantor. Further it will be seen that the CERSAI Registration in respect of the charge by the Bank is dated 11.04.2008. Whereas, the date of issuance of notice under Section 135D of the Bombay Land Revenue Code, 1879 is 03.06.2015 and the date of attachment of the State Tax Authority is dated 13.08.2019. Therefore, evidently the Bank has prior charge over the property and following the law declared by this Court in Kalupur Commercial Co-operative Bank Ltd. Vs. State of Gujarat [ 2019 (9) TMI 1018 - GUJARAT HIGH COURT] , it has to be held that the property in question, being property No. 3 in the auction notice dated 20.06.2022 does not bear any charge for the crown debts, after the same has been purchased in the auction by the Petitioner. Conclusion - i) The actions of Respondent No. 1 in issuing a conditional sale certificate with encumbrances are unlawful under the SARFAESI Act. ii) The attachment orders by Respondent No. 2 are also found to be invalid as they were applied to a property not owned by the borrower. The provisional attachment order as well as the final attachment order whereby the charge was created on the property being Commercial property at survey no. 316/8p, Sr. No. 294, Opp. Rajdhani Hotel, Mahuva Road, Badhada, Ta. Savarkundla, Dist. Amreli is hereby quashed and set aside - Petition allowed.

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• Indian Laws

• 2025 (3) TMI 950
  Massive illegal mining and sale of Beach Sand Minerals (BSM) by various private lessees/mining companies in the three southern districts of Tamil Nadu namely Thoothukudi, Tirunelveli and Kanniyakumari during the period of 2000-2001 till 2016-2017 - PIL converted to suo moto case, in view of environmental damages caused. Illegal Mining, Storage, Transportation and Exports of BSMs - Extent and Quantum of Illegal Beach Sand Mining - HELD THAT:- The Respondents are trying to use the judicial process to wriggle away from the consequences arising out of their illegal actions. Committee after committee formed and re-agitating on the same point of issue will not pave any way to the ends to justice. In the eyes of this Court, the Bedi Committee, Sahoo Committee, Reassessment Committee and the learned Amicus Curiae have carried out a fair and impartial task in inspecting and evaluating the extent and quantum of illegal beach sand mining carried out. An examination of the various committee reports and the Amicus Curiae reports prove the case of illegal beach sand mining. The methodology adopted by the committee on careful examination by this Court is free from bias and is not in transgression of natural justice principles. And the reports have been elaborately made after inspection. The Amicus Curiae appointed by this Court also based on a separate and detailed report has uncovered the presence of Monazite in the mined minerals, which is prescribed substance under the Atomic Energy Act and the mining companies have no right to deal with the same - The committees have outlined various other illegalities and irregularities in transport, storage and dealing of these illegally mined beach sand minerals, thereby causing a grave danger to the environment. It is to be noted that there are a plethora of judgements on the issue of illegal sand mining, guidelines to be followed, measures to be taken, enforcement mechanisms so on and so forth. But it would be an understatement to say that this has not been effectively adopted or followed by the implementing officials at the ground level. There are many ways prescribed by various agencies, departments and the Government to curb illegal beach sand mining including legal frameworks such as the MMDR Act, various other environmental legislations, Sustainable Sand Mining Management Guidelines (SSMG) 2020, Enforcement and Monitoring Guidelines for Sand Mining (EMGSM) 2020. But the core question for consideration is why can t the illegal sand mining be stopped inspite of the humongous Government resources, funds and time spent to draft these legislations, measures and guidelines. The simple answer that can be deduced through the careful examination of the records and reports before us reveals the large scale corruption and collusion across departments, officials and bureaucracy. A systemic implementation failure has paved way for the huge loss to the National and State exchequer, which ought to be remedied at the earliest. Stringent and strict actions are the need of the hour to curb the illegalities and irregularities proliferating from illegal beach sand mining. Illegal transport - HELD THAT:- The Amicus Curiae report on study of primary documents and records pertaining to transport permits clearly discerns the circumstances which constitute Unlawful transport . i. Transporting quantities in excess of approved quantities; ii. Transporting minerals not approved to be mined or transported for a specific lease and; iii. Transporting minerals during years/periods when there was no approved scheme of mining . Of the total quantum of 1, 51, 27, 070 MTs of raw sand for which transport permits were obtained, the total quantum unlawfully transported works out to 86, 35, 151 MTs in terms of the 62 mining leases owned by M/s.V.V.Mineral and M/s.Transworld Garnet India Private Limited. A shocking finding in the Amicus Curiae report is the total failure of the District Mines officials to check as to whether the transport permit that have been issued by them for years are according to the approved Mining plan/scheme and whether it is the approved quantities permitted to be transported. Another finding that is surprising is that the District collectors also failed to check on these mismatches in the transport permits when they prepared the annual reconciliation of royalty payments. These failures on the part of the officials paved way for a huge financial loss to the Government considering the enormous amount of BSMs unlawfully transported throughout several years. Illegal Exports - HELD THAT:- The scale and magnitude of the lorries unlawfully transporting illegally mined raw sand and minerals across districts without any lawful obstruction in place, to stop this crime, is mind boggling and disheartening. Natural resources being exploited is one thing, but when done beyond legally permissible limit to benefit a handful of people at the expense of the National economic interest and affecting the Country s overall growth and at the cost of people s livelihood has shaken the conscience of this Court. These are issues which need to be dealt with at the earliest and the way in which our Judicial process has been used to thwart the law from taking the right course of action is discernible from the endless litigations filed across different courts. Litigating and re-litigating on the same issues and trying to weave knot after knot till nobody knows how to unknot it. This modus seldom paves any benefit. It eventually itself becomes a point of accusation against the law breakers. Law can be bent. True. But it bends only for Justice. Our Nation is great in a way that Laws cannot be a mute spectator for long. Conscience and Spirit of our Courts cannot be doused easily and our Constitution keeps the heartbeat alive to ensure that People of this Country can never be wronged. The Amicus Curiae report highlighted illegal transport of minerals, including discrepancies in transport permits and unauthorized exports. There are illegal transportation was rampant, with significant quantities of BSMs exported without proper permits, violating Section 4(1-A) of the MMDR Act. Presence of Monazite and Handling Licenses - HELD THAT:- IMonazite being a prescribed substance under Atomic Energy Act and private parties are prohibited from mining, processing, selling or exporting the mineral, there is no valid or justifiable reason to add the Monazite to the existing leases of the private parties. Moreover when the mineral Monazite is related to the issues concerning National security, this cannot be viewed lightly. Such violations ought to be viewed seriously and the State Government by approving the proposals of the private parties to mine four atomic minerals including Monazite by adding these minerals to the pre-existing leases for mining Garnet, Rutile and Ilmenite only has paved way for the illegality. This necessitates serious actions against the officials involved and a probe into the events leading to such grant of illegal approvals ought to be carried out to cull out any instances of corruption and collusion between the officials and the private mining lessees and appropriate legal action including criminal prosecution needs to be instituted against such Government officials and private mining parties involved. Royalty Settlement, calculations and payments - HELD THAT:- There is a wrongful application of Rule 64-B(2) for computing royalty on raw sand instead of ad valorem basis as per Rule 64-D. The royalty accounts as settled by the District Collectors of Tirunelveli, Thoothukudi and Kanniyakumari computing the royalty for the quantum of raw sand transport by arbitrarily applying Rule 64-B(2), MCR in favour of M/s.V.V.Mineral (R8), M/s.Transworld Garnet India Private Limited (R9) and M/s.Industrial Mineral India Private limited (R13) is held legally invalid - The royalty accounts wrongfully settled by the District Collector of Tirunelveli, Thoothukudi and Kanniyakumari by computing royalty for raw sand transported by wrongful application of Rule 64-B(2) of MCR, 1960 in respect of M/s.V.V.Mineral (R8), M/s.Transworld Garnet India Private Limited (R9) and M/s.Industrial Mineral India Private Limited (R13), unsettled by the State Government is held valid. The computation of royalty on ad valorem basis for the actual quantum of minerals sold/ exported under the provisions of Section 9(2) read with Second Schedule of the MMDR Act and Rule 64-D of MCR, 1960 in the light of third report of the Amicus, is held legally valid. The State Government is directed to initiate all necessary actions to recover the cost of minerals and royalty as per the findings in the Amicus Report relating to post ban period which held the 1.5 crore MTs of BSMs found by Sahoo Committee in 2018 and the stock of 1.40 Crore MTs of BSM stocks found by the RR-2023 as illegally mined and processed and hence all legal consequence to that effect shall follow. Role of Officials and accountability - HELD THAT:- Corruption in mining has become a norm and has been standardised by the officials involved. A pattern can be drawn from these illicit sand mining operations. The triangular link is undeniable here between the political, executive and the mining lessees. It has become a systemic corruption. It is also undeniably established that Right from the grant of mining lease/approval/license to grant of transport permits to illegal inclusion of monazite in mining lease to lack of efficient monitoring to arbitrary and legally questionable royalty settlement proceedings to lack of initiation of appropriate action when required and complete shedding of accountability on the part of the officials concerned, top to bottom, across departments and executive spectrum, there appears on the face of it a scheme of collusion, corruption and connivance among political, executive and the private mining lessees. The involvement of Government officials and illegalities perpetrated by them including political nexus in support of this scam should be investigated thoroughly. This is an imminent necessity to prevent corrosion of public trust in the system. The political nexus to the massive scam cannot be ruled out. Hence the the CBI is directed to investigate into the alleged political nexus and the role of the policy making authorities in conspiring with the private mining companies shall be investigated. Conclusion - This Court finds it a fit case to refer the matter to CBI. Hence based on the findings in the Committee reports and based on all other materials available on record, the CBI is directed to register criminal cases and launch investigations. Also any pending cases relating to the issues discussed in this judgment registered by the Tamil Nadu Police is directed to be transferred to the CBI for enabling effective investigation. Petition disposed off.

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